Uniswap Labs Urges SEC to Rethink DeFi Rule After Supreme Court Ruling

Uniswap Labs has formally petitioned the U. S. Securities and Trade Fee (SEC) to revisit the proposed rule modifications it has made to the Securities Trade Act of 1934 with the purpose of broadening the definition of an “change”.

DeFi platform Uniswap Labs has filed a petition with the U.S. Securities and Exchange Commission (SEC) urging the regulator to reconsider the proposed rule changes to the Securities Exchange Act of 1934. The proposed changes aim to expand the definition of an “exchange.”

Uniswap claims that the proposed changes would overstep the SEC’s authority over DeFi platforms and are likely to be struck down by the Supreme Court based on a recent decision.

Uniswap’s main argument is based on the Supreme Court’s recent ruling in Loper Shiny Enterprises v. Raimondo, which changed the legal framework. This decision overturns the deference accorded to Chevron, which had allowed federal agencies to interpret vague statutory provisions.

According to Coinbase CLO Katherine Minarik, this changes the legal landscape for the SEC’s efforts to classify DeFi protocols as exchanges.

Without this deference, the SEC’s interpretation of the term ‘exchange’ is boundless and unsupported, claims Uniswap. They argue that the statutory definition does not capture DeFi protocols, and the SEC’s amendment will be rejected by the courts.

Back in April, Uniswap had received a Wells Notice from the SEC, indicating the regulator’s intent to pursue legal action against the company. The notice alleged that Uniswap was conducting securities trading without being registered as an exchange or a broker-dealer.

However, Uniswap defended itself, stating that its protocol does not qualify as an exchange and is instead a passive technology. The company asserted that the SEC would have to change the current definition of an exchange to cover their operations.

After the Supreme Court ruling, Uniswap urged the SEC to reconsider the proposed amendments and extend the comment period. They claim that the legal landscape has shifted dramatically, necessitating fresh participation from the public.

The original comments were made under a legal standard that assumed Chevron deference, which is no longer valid. Therefore, Uniswap highlighted the need to revisit the comments to ensure any new rules align with the current legal framework and do not overstep the boundaries set by Congress.

At the same time, Uniswap also argued that the proposed amendments would stifle innovation and create legal uncertainty. They noted that the amendments could adversely affect the DeFi sector, which handles trillions of dollars in transactions.

The company also points to previous court decisions that have shown a reluctance to apply securities laws to decentralized crypto entities, citing SEC v. Coinbase, Inc. and SEC v. Binance Holdings. They counter that the SEC’s approach to regulation through enforcement actions rather than definitive rules is likely to yield varying legal outcomes and regulatory haze.

Despite the pressure from regulators, Uniswap is not ready to give up its claim and the DeFi ecosystem. Earlier this year, Hayden Adams, the founder of Uniswap, maintained that they do operate legally and that the SEC’s method of regulation is flawed.

According to Adams, the SEC’s decision to go after relatively large players like Uniswap and Coinbase without checking on the fraudsters is hurting the market. Uniswap is willing to challenge the SEC’s actions, which they believe are politically motivated, and will continue the legal battle all the way to the Supreme Court.

The above is the detailed content of Uniswap Labs Urges SEC to Rethink DeFi Rule After Supreme Court Ruling. For more information, please follow other related articles on the PHP Chinese website!