Following the SEC’s notice on May 22, Uniswap has countered the agency’s proposed rule changes, arguing that the SEC’s attempts to control the DeFi market are based on outdated legal frameworks.
Since April 2023, the SEC has proposed expanding the definition of an exchange under the Securities Exchange Act of 1934 to include decentralized exchanges (DEXs) in the DeFi space.
Uniswap, one of the most vigorous opponents of this proposal, has pushed back. Uniswap Labs, the team behind the DEX, sent a letter to the SEC early on July 10, demanding the withdrawal of the proposal to regulate the DeFi market.
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. 2/x
— Katherine Minarik (@MinarikLaw) July 9, 2024
In the letter, Uniswap Labs reiterated arguments from a previous response in June. They emphasized that the U.S. Supreme Court’s recent decision on June 28 to overturn the “Chevron” precedent undermines the SEC’s ability to interpret the Securities Exchange Act this way.
The “Chevron” precedent had allowed U.S. agencies to decide on aspects not explicitly covered by law but within their regulatory scope.
Uniswap argued that there is no reason for the SEC to waste resources on redefining “exchange” since, even before the Chevron decision, this was already contentious and likely to face significant legal challenges.
The protocol also claimed that the proposed changes are “unclear” to the public, meaning the SEC would have to prosecute each case individually, leading to inconsistency in its arguments.
Uniswap concluded:
“For all these reasons, the SEC should not continue with these proposed changes, as they are being drafted based on a legal context that no longer exists.”
In April 2024, the SEC they had issued a Wells Notice to Uniswap, threatening legal action, and at that time, the SEC alleged that Uniswap Labs was operating the DEX as an unregistered securities exchange and that UNI tokens were considered investment contracts.
Uniswap Labs then posted a blog titled “The fight for DeFi continues” to refute the SEC’s securities allegations.
