The XRP community is concerned about the impending XRP Ledger (XRPL) Automated Money Maker (AMM), as the initiative might experience a setback due to the newly released cryptocurrency rules by the United States Securities and Exchange Commission (SEC). 

The US SEC New Rules Might Hindered The Upcoming XRPL AMM 

In an effort to uphold stringent regulation, the US SEC has announced a set of strict rules that require an individual who provides liquidity to register with the regulator. These include assets like cryptocurrencies that are categorized as securities or government securities.

Crypto enthusiasts are curious about this and how it could impact the future XRPL AMM platform. As it is widely known that the feature will enable XRP holders to generate passive income, through their role as liquidity providers for different assets on XRPL.

As per the rules, a specific group of liquidity providers on AMM must be required to register with the SEC. However, this applies to those who are involved with assets regarded as securities.

So far, pro-crypto lawyer attorney Bill Morgan has expressed his displeasure with the rules. Morgan shared his insights on X while noting potential negative effects on certain entities that supply liquidity to the market.

In the X post, the pro-crypto lawyer was seen questioning the SEC’s emphasis on liquidity availability. He also noted the potential disruption that decentralization in this sector could cause to the present systems.

Morgan also pointed out in another X post that the change could make the XRPL DEX register as an exchange or Alternative Trading system (ATS). This is because the guide states that it may be crucial for both centralized and decentralized exchanges to register with the SEC as an exchange or ATS. 

Registered Entities To Become Self-Regulatory Organization (SRO) Member

According to the agency, those who register with the SEC will become a member of a Self-Regulatory Organization (SRO), adhering to regulatory requirements and federal securities laws.

Gary Gensler, the SEC chairman, expressed his pleasure in the developments, noting that they will protect investors and promote the market. “I am pleased to support this adoption because it requires that firms that act as dealers register with the regulator as dealers, thereby protecting investors as well as promoting market integrity, resiliency, and transparency,” he stated.

He added, “Absent an exemption or exception, if anyone trades in a manner consistent with de facto market making, it must register with us as a dealer, consistent with Congress’s intent.”

It is noteworthy that the SEC made these regulations public when it initially introduced them in March 2022 while trying to include the DeFi sector. However, leaders of the crypto space criticized the rules, saying that they are not viable because of the decentralized nature of DeFi protocols.

Despite the initial clamor, the latest development points to the guidelines being put into effect. This could present an additional difficulty for centralized exchanges since unclear regulations have made it hard to register with the Commission.