Uniswap Challenges SEC’s DeFi Authority After Supreme Court Ruling

Uniswap Labs, the developer behind the Uniswap Decentralized Exchange, has called on the SEC to drop its proposed regulation of DeFi. This plea is based on a recent Supreme Court decision, which Uniswap argues limits the SEC’s authority over DeFi platforms and would likely lead to the proposal being rejected.

What is likely to happen next?

Supreme Court Ruling Changes the Game

Uniswap’s main argument hinges on the Supreme Court’s recent ruling in Loper Bright Enterprises v. Raimondo, which altered the legal landscape by overturning Chevron Deference. This long-standing practice allowed government agencies considerable freedom in interpreting ambiguous laws.

Coinbase’s Chief Legal Officer, Katherine Minarik, highlighted that without Chevron Deference, the SEC’s interpretation lacks a strong legal basis. Uniswap Labs asserts that current laws do not encompass DeFi platforms, suggesting that the courts would reject the SEC’s proposed amendments. In a recent tweet, Minarik emphasized, “Both the SEC and the industry have better ways to spend their resources than in litigation over an unlawful rule.”

In April, the SEC issued a Wells Notice to Uniswap Labs, signaling potential legal action. The notice alleged that Uniswap was conducting securities trading without proper registration as an exchange and broker. Uniswap Labs defended itself by stating that its protocol functions as passive technology, not as an exchange.

Calls for a Reevaluation of SEC’s Proposal

Following the Supreme Court ruling, Uniswap Labs has suggested the SEC revisit its proposed amendments and extend the comment period. They argue that the significant shift in the legal environment necessitates fresh public input, as the original comments were made under the now-invalid assumption of Chevron Deference.

Uniswap emphasizes the importance of ensuring new regulations align with the current legal framework and do not exceed congressional limits. They also argue that the proposed amendments could hinder innovation and create legal uncertainties, potentially impacting the DeFi industry, which handles trillions of dollars in transactions.

Despite these challenges, Uniswap remains committed to legal compliance. Uniswap Labs is ready to contest the SEC’s actions, which they see as politically motivated, and is prepared to take the fight to the Supreme Court if necessary.

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Is the SEC vs. DeFi battle headed for the Supreme Court? Stay tuned.