The battle between Uniswap and the SEC over control of Decentralized Finance (DeFi) continues to heat up. Uniswap Labs, the developer behind the popular decentralized exchange Uniswap, has renewed its pushback against the SEC’s proposed regulations, citing a recent Supreme Court decision as a turning point.
In a letter submitted on July 9th, Uniswap argues that the SEC’s attempt to expand its authority over DeFi through amendments to the Exchange Act is unnecessary and unlikely to succeed in court. This latest pushback follows an initial comment letter submitted in April.
The core of Uniswap’s argument hinges on the recent Chevron decision. In June, the Supreme Court issued a ruling in Loper Bright Enterprises v. Raimondo, which limited the deference courts give to federal agencies’ interpretations of ambiguous laws. Uniswap claims this decision weakens the SEC’s legal footing in its attempt to define DeFi platforms as “exchanges” under the Exchange Act.
“The SEC’s proposed amendments are being made against a legal backdrop that no longer exists,” Uniswap stated in its letter. They argue that the SEC should abandon its efforts to amend the act and instead focus on working with the DeFi community to develop clear and appropriate regulations.
Uniswap further argues that the SEC’s proposed amendments are likely to be challenged in court and ultimately fail. They believe the current definition of “exchange” within the Exchange Act doesn’t encompass DeFi protocols due to their decentralized nature.
The SEC, on the other hand, has expressed concerns about potential risks associated with DeFi, including fraud and manipulation. They believe bringing DeFi under their regulatory umbrella is necessary to protect investors.
This ongoing debate highlights the tension between innovation and regulation in the world of cryptocurrency. DeFi represents a new financial paradigm that challenges traditional financial institutions and regulatory frameworks. With Uniswap’s renewed challenge, the future of DeFi regulation remains uncertain.
