XRPL AMM’s Future: SEC’s Crypto Regulation Update Raises Concerns

The XRP community is worried about the upcoming XRP Ledger (XRPL) Automated Money Maker (AMM) because of new cryptocurrency rules from the United States Securities and Exchange Commission (SEC).

SEC’s New Rules May Affect XRPL AMM

The SEC has announced strict rules that require individuals who provide liquidity to register with the regulator. This includes assets like cryptocurrencies that are considered securities or government securities.

Crypto enthusiasts are concerned about how this will affect the future XRPL AMM platform, which will allow XRP holders to earn passive income by providing liquidity for different assets on XRPL.

SEC’s Emphasis on Liquidity Availability Questioned

Pro-crypto lawyer Bill Morgan has criticized the SEC’s rules, saying they could negatively affect entities that provide liquidity to the market. He questioned the SEC’s emphasis on liquidity availability and noted the potential disruption that decentralization in this sector could cause to current systems.

XRPL DEX May Need to Register as an Exchange or ATS

Morgan also pointed out that the new rules could require the XRPL DEX to register as an exchange or Alternative Trading System (ATS). This is because the SEC’s guidance states that both centralized and decentralized exchanges may need to register with the SEC as an exchange or ATS.

Registered Entities to Become Self-Regulatory Organization (SRO) Members

Entities that register with the SEC will become members of a Self-Regulatory Organization (SRO), adhering to regulatory requirements and federal securities laws.

SEC Chairman Gary Gensler expressed his support for the new rules, saying they will protect investors and promote market integrity.

SEC’s Regulations Initially Met with Criticism

The SEC first proposed these regulations in March 2022 in an attempt to regulate the DeFi sector. However, leaders in the crypto space criticized the rules, saying they are not viable because of the decentralized nature of DeFi protocols.

Despite the initial criticism, the latest developments indicate that the guidelines are being put into effect. This could present an additional challenge for centralized exchanges, as unclear regulations have made it difficult to register with the Commission.