Uniswap Cites Chevron Case Requesting SEC to Drop Bid on Ruling Over DeFi

As a researcher with a background in blockchain technology and decentralized finance (DeFi), I strongly believe that Uniswap Labs is taking a principled stand against the US Securities and Exchange Commission’s (SEC) proposed amendments to the definition of an “exchange” under the Exchange Act of 1934.

Uniswap Labs, the team behind the popular decentralized exchange Uniswap, has petitioned the US Securities and Exchange Commission (SEC) to reconsider their proposal regarding regulatory oversight in the Decentralized Finance (DeFi) sector.

In the spring of 2023, the Securities and Exchange Commission (SEC) proposed broadening the scope of what constitutes an “exchange” under the Exchange Act of 1934. At that time, the SEC advocated for including crypto marketplaces within the Decentralized Finance (DeFi) sector in this definition.

Uniswap has continued to present its case against the SEC’s demands, adding new points in a letter submitted on July 9. The cryptocurrency platform is urging the SEC to reconsider and withdraw the proposed amendments.

Uniswap has referenced the Chevron Supreme Court ruling in their recent disputes, implying that lower courts are now relieved of the obligation to contradict federal agencies’ interpretations of ambiguous legal statutes.

Uniswap argued that the US Securities and Exchange Commission (SEC) would be needlessly expending resources in attempting to revise the term “exchange,” an action that was previously considered “likely to face, and unlikely to withstand, a legal challenge” prior to the Chevron decision.

“Should the Commission push through with its proposed modifications, a judicial review court is expected to find that my interpretation of the Exchange Act by the Commission strains the statutory text excessively,” I, Uniswap, would argue.

The decentralized exchange argued that the SEC’s proposed amendments are overly broad, with no apparent boundaries for the general public. Consequently, the SEC would be compelled to pursue litigation on a situation-by-situation basis. This approach could lead to inconsistencies and a lack of clear guidance.

Uniswap: SEC Shouldn’t Adopt Proposed Amendments

“According to Uniswap’s perspective, the SEC should reconsider their proposed amendments. The current legal landscape has shifted significantly since the drafting of these proposals.”

As a researcher studying the decentralized finance (DeFi) landscape, I strongly urge the Securities and Exchange Commission (SEC) to reconsider its proposed rulemaking that aims to broaden the definition of an “exchange” to encompass DeFi platforms like Uniswap. This expansion, in my opinion, would be both drastic and inappropriate.

— Katherine Minarik (@MinarikLaw) July 9, 2024

If the SEC declines to make the proposed amendments, they should reconsider and extend the comment period so that the public can reflect on the implications of the latest Chevron ruling.

In April, the SEC sent a warning notice, referred to as a Wells notice, to Uniswap. This notice signified the intent of the Securities and Exchange Commission (SEC) staff to propose taking enforcement action against the decentralized exchange. A month later, Uniswap published a blog post in response, where they dismissed the SEC’s legal rationale as insufficient and pledged their willingness to defend themselves in court if required.

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2024-07-10 11:37