Uniswap Challenges SEC’s DeFi Regulations Citing Chevron Ruling

Uniswap Labs, the developer behind the renowned decentralized exchange Uniswap, has once again urged the U.S. Securities and Exchange Commission (SEC) to withdraw its proposal to regulate decentralized finance (DeFi). The request comes in the wake of a significant Supreme Court decision that Uniswap believes undermines the SEC’s legal foundation for such regulations.

Supreme Court Decision Impacts SEC’s Authority

In a recent letter dated July 9, Uniswap Labs cited the Supreme Court’s decision in the case of Loper Bright Enterprises v. Raimondo, which ruled that courts are no longer required to defer to federal agencies’ interpretations of ambiguous laws. This ruling, Uniswap argues, nullifies the SEC’s basis for expanding the definition of “exchange” in the Exchange Act of 1934 to encompass DeFi platforms.

Source: Katherine Minarik

Uniswap’s Stance on SEC’s Proposed Amendments

Uniswap Labs has been vocal in its opposition to the SEC’s proposed legal amendments since they were first introduced in April 2023. The SEC aims to broaden the definition of an exchange to include DeFi participants, a move Uniswap believes is both unnecessary and legally flawed. In their July 9 letter, Uniswap emphasized that pursuing these amendments would waste the SEC’s limited resources and likely result in judicial challenges that the SEC would struggle to win.

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Legal and Practical Implications of the Amendments

Uniswap contends that the proposed amendments lack clear limits, leading to potential inconsistencies and a lack of guidance for the public. They argue that the amendments would require the SEC to litigate each case individually, creating a fragmented and inefficient regulatory environment. Uniswap insists that the SEC should abandon the proposed changes or, at the very least, reopen the comment period to allow the public to consider the impact of the recent Supreme Court decision.

SEC’s Wells Notice and Uniswap’s Response

In April, the SEC issued a Wells notice to Uniswap, indicating its intention to recommend enforcement action against the exchange. Uniswap responded with a blog post in May, criticizing the SEC’s legal arguments as weak and declaring their readiness to contest the matter in court if necessary. Uniswap remains steadfast in its position, advocating for a regulatory framework that recognizes the unique nature of DeFi and protects innovation within the industry.