CFTC Commissioner Mersinger Warns DeFi Enforcement Action Could Stifle Innovation and Drive Developers Out of the US

Commissioner Summer K. Mersinger voiced strong opposition to the Commodity Futures Trading Commission's (CFTC) decision to impose a $175,000

Uniswap Labs has settled Commodity Futures Trading Commission (CFTC) charges that it illegally facilitated digital asset derivatives transactions, agreeing to pay a $175,000 fine, the regulator said on Friday.

According to the CFTC, its investigation found that from March 2021 to at least September 2022, Uniswap operated an online digital asset trading platform that facilitated trading in digital asset derivatives, including leveraged tokens.

These tokens provided exposure to the price movements of digital assets such as Bitcoin and Ethereum, allowing users to trade the assets with leverage, which amplified both potential gains and risks.

The CFTC said that these leveraged digital asset transactions conducted on the Uniswap decentralized exchange (DEX) were retail commodity contracts.

Under the Commodity Exchange Act (CEA), such contracts must be conducted on a registered contract market or other designated board of trade. However, Uniswap had not registered its platform with the CFTC.

The order also found that these transactions did not result in the actual delivery of the assets within 28 days, further solidifying the need for regulatory oversight, the regulator added.

As part of the settlement, Uniswap Labs agreed to pay a $175,000 fine and to cease and desist from further violations of the CEA.

The CFTC acknowledged that Uniswap had cooperated with the investigation, which contributed to the reduced penalty.

In a parallel probe, the Securities and Exchange Commission (SEC) recently filed a Wells Notice against Uniswap Labs, alleging that its native token (UNI) should have been registered as a security.

However, the CFTC has maintained that digital assets like Bitcoin and Ether are commodities and fall under its regulatory ambit.

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