Uniswap has strongly urged the US Securities and Change Fee (SEC) to desert its try to incorporate decentralized finance (DeFi) markets in its definition of an “exchange.”
In a letter on 9 July, Uniswap cited a current Supreme Courtroom ruling on the Chevron doctrine, stating that the regulator might not use the “Chevron deference” to exert its energy over the crypto business.
The 40-year-old Supreme Courtroom doctrine allowed administrative companies such because the SEC flexibility to interpret legal guidelines that Congress had left ambiguous. On 28 June, the Supreme Courtroom issued a landmark determination to overturn the Chevron doctrine.
“For better or worse—the Commission will not be able to claim the benefit of Chevron deference to defend its aggressive and atextual interpretation of its statutory authority,” mentioned Uniswap.
“There is no reason to spend the Commission’s limited resources on that issue, or to force the industry to do the same.”
Uniswap is a decentralized cryptocurrency trade (DEX) that operates on the Ethereum blockchain. It permits customers to commerce varied Ethereum-based tokens straight with each other with out the necessity for an middleman. Uniswap makes use of an automatic market-making (AMM) system, which entails liquidity swimming pools somewhat than conventional order books, enabling steady buying and selling and liquidity provision.
Uniswap had already criticised the SEC’s try to broaden its definition of an trade again in June however now, with out the Chevron doctrine, the SEC’s proposal calls for a a lot stricter interpretation of the regulation to achieve authority over the crypto markets.
“If the Commission moves forward with its proposed amendments, a reviewing court “exercis[ing] independent judgment in determining the meaning of [the Exchange Act’s] provisions” is for certain to conclude that the Fee’s interpretation of the Change Act stretches the statutory textual content too far,” Uniswap argued.
Katherine Minarik, Uniswap’s chief authorized officer, emphasised on X the Supreme Courtroom’s rejection of the Chevron deference. “For better or worse, the Supreme Court has rejected Chevron deference. The SEC’s proposal was flawed even with that deference — and it’s all the more so under today’s standard,” she mentioned.
Right this moment @Uniswap Labs urged the SEC to not proceed with its proposed rulemaking that will dramatically and improperly broaden the definition of an ‘exchange’ to incorporate DeFi and extra. 1/x
— Katherine Minarik (@MinarikLaw) July 9, 2024
In April, Uniswap obtained a Wells Discover from the SEC. Uniswap responded by saying the SEC’s authorized arguments are “weak” and have been “refuted” by courts.
“The SEC’s aggressive theories are an effort to expand its jurisdiction beyond exchanges to communications technology – and beyond securities to all markets,” Uniswap said.
Uniswap Responds to SEC Wells Discover, Tells SEC to Drop “Weak” Expenses
Uniswap Labs has known as out the SEC for being a “repeat offender against crypto”
A Wells Discover, which is normally despatched forward of launching a proper lawsuit. Coinbase and BUSD issuer Paxos are among the many rising checklist of crypto companies which have obtained such notices.
Uniswap Labs obtained a Wells Discover from the SEC in April warning that the DEX creator could also be violating U.S. securities legal guidelines by working an unregistered securities broker-dealer via its app interface.
Uniswap issued a 40-page response one month later claiming that the SEC was stretching the definitions of securities, exchanges, and contracts.