Uniswap Challenges SEC's Proposed DeFi Regulations

SEC's Proposal

Since April 2023, the SEC has sought to expand the definition of "exchange" in the Exchange Act of 1934 to include crypto market participants in DeFi. Uniswap has been a vocal opponent of this expansion, arguing that it is unnecessary and overreaching.

Supreme Court Influence

In a July 9 letter, Uniswap referenced the Chevron decision made during the Loper Bright Enterprises v. Raimondo Supreme Court case on June 28. This ruling established that courts no longer need to defer to federal agencies to interpret ambiguous laws. Uniswap contends that this decision weakens the SEC's position and makes its efforts to amend the definition of "exchange" a waste of resources.

Arguments Against the SEC Proposal

Uniswap argues that the SEC's proposed amendments are overly broad and lack clear limits, which could lead to inconsistent enforcement and ongoing litigation. They state, "If the Commission moves forward with its proposed amendments, a reviewing court [...] is certain to conclude that the Commission’s interpretation of the Exchange Act stretches the statutory text too far."

Call for Action

Uniswap suggests that the SEC should either abandon the proposed amendments or reopen the comment period to allow the public to consider the impact of the Chevron decision. This move, they argue, would prevent the SEC from pursuing a regulation that is likely to face and fail judicial challenges.

Ongoing Legal Battle

In April, the SEC issued a Wells notice to Uniswap, signaling potential enforcement action. In response, Uniswap published a blog post in May, calling the SEC's legal arguments "weak" and stating its readiness to contest the matter in court if necessary.

Conclusion

Uniswap's appeal to the SEC highlights the ongoing tension between regulators and the DeFi community. The recent Supreme Court decision adds a new layer of complexity to the debate, potentially reshaping the regulatory landscape for decentralized finance.