Uniswap Challenges SEC Over Crypto Exchange Definition

Uniswap Labs is difficult the US Securities and Alternate Fee’s (SEC) proposed rulemaking efforts that may increase the definition of a crypto ‘trade’ below US securities legal guidelines to incorporate decentralized finance (DeFi) platforms. The problem is framed inside a letter to the SEC, bolstered by current Supreme Court docket selections that might affect the interpretation and enforceability of such regulatory expansions.

Uniswap Takes On SEC

Katherine Minarik, Chief Authorized Officer of Uniswap Labs, revealed the corporate’s step in a put up on X, citing the US Supreme Court docket’s current judgment which rejects the applying of Chevron deference in federal company rulemaking. “For higher or worse, the Supreme Court docket has rejected Chevron deference. The SEC’s proposal was flawed even with that deference — and it’s all of the extra so below in the present day’s normal,” Minarik acknowledged.

As we speak @Uniswap Labs urged the SEC to not proceed with its proposed rulemaking that may dramatically and improperly increase the definition of an ‘trade’ to incorporate DeFi and extra. 1/x

— Katherine Minarik (@MinarikLaw) July 9, 2024

The Chevron deference traditionally allowed courts to defer to a federal company’s interpretation of an ambiguous statute inside its jurisdiction. The landmark choice within the case of Loper Shiny Enterprises, et al. v. Raimondo dominated that federal businesses should adhere extra strictly to the statutory textual content, which has implications for the SEC’s present enforcement actions in opposition to the complete crypto business.

Within the letter, Uniswap Labs particulars its place in opposition to the SEC’s proposal to amend the definition of a crypto “trade” as outlined within the Securities Alternate Act of 1934. This Act at present defines an trade as “a market or amenities for bringing collectively purchasers and sellers of securities.” The SEC’s proposed modifications search to increase this definition to incorporate not simply conventional securities buying and selling platforms but in addition decentralized protocols like Uniswap.

The corporate’s submission expresses a robust authorized stance that the SEC’s broader definition is unsupported by the statutory language of the Alternate Act. The letter argues that increasing the definition to incorporate decentralized networks and applied sciences goes past the scope of the Act because it stands and would doubtless face authorized challenges based mostly on the current Supreme Court docket choice. In accordance with Minarik, this might result in “an illegal rule” that may waste each the Fee’s and the business’s assets.

The letter additional emphasizes the potential authorized repercussions by citing two current court docket instances: SEC vs. Binance Holdings and SEC vs. Coinbase. In each instances, federal courts expressed skepticism concerning the SEC’s method to regulating the complete crypto business by enforcement actions somewhat than clear, established guidelines.

These instances, in response to Uniswap Labs, illustrate the judicial pushback in opposition to making use of conventional securities legal guidelines to the decentralized elements of the crypto market, which might point out the doubtless reception of the SEC’s proposed rule modifications within the courts.

Uniswap’s correspondence additionally means that the SEC ought to take into account the influence of the Loper Shiny choice and reopen the remark interval for its proposal. This may enable for added business enter contemplating the modified authorized panorama post-decision.

At press time, UNI traded at $8.24.

Featured picture from Uniswap, chart from TradingView.com