DeFi
Uniswap takes DeFi regulations into account
According to Uniswap Labs, the SEC’s attempt to impose DeFi regulation would be weak and misguided.
This is what they wrote yesterday in a publication published on their official blog titled “The Fight for DeFi Continues”.
DeFi Regulation: The problem between Uniswap and the SEC
It all comes from the Wells notice that the SEC sent to Uniswap in April.
This notice informs Uniswap Labs that the agency plans to make a legal decision regarding human control.
According to Uniswap, the SEC claims that the Uniswap protocol is an unregistered exchange controlled by the company Uniswap Labs.
In reality, the Uniswap protocol is decentralized, and in theory it should not be controlled by anyone except the Ethereum network as a whole, and by the other networks on which it operates.
However, the SEC also argues that Uniswap Labs acts as an unregistered financial intermediary and that the UNI token is an investment contract.
Uniswap’s objections to these accusations are that value represented in a specific digital file format cannot always and in all cases be defined as a security, and that the SEC cannot arbitrarily expand exchange definitions, of broker and contracts to the point of rendering them meaningless.
I think Uniswap is an example of a file format, while the protocol is defined as a general-purpose computer program that can be used and integrated.
Furthermore, he highlights that the hundreds of thousands of users who received UNI tokens for their participation, in the beginning, received the token for free, without any contracts and without any specific expectation of profit.
Uniswap Labs’ response to the SEC’s memo on DeFi regulations
Uniswap Labs has already sent the SEC a global legal response in their opinion Wells, and in yesterday’s message he summarized his position for easier understanding.
First, they state that they believe the SEC should embrace open source technology, instead of stopping it. In this regard, they also mock the agency, emphasizing that its goal should be to “protect investors and maintain fair, orderly, and efficient markets.”
Instead, their aggressive theories are framed as an effort to expand the SEC’s jurisdiction beyond stock exchanges, to communications technology and all markets.
An underlying proposition is that legal arguments are often defeated by the addition of a state’s rebuttal to the courts. It is also possible that the House could approve a bill that gives the CFTC, not the SEC, oversight authority over digital asset trading.
They believe they are on the right side of history and are calling on the SEC not to use its taxpayer-funded resources to pursue charges against them.
In the event the case goes to court, they say they are ready to fight, having on their side attorneys like Andrew Ceresney, a former SEC enforcement official who previously represented Ripple in the victory against the agency, and Don Verrilli, formerly of United. The U.S. solicitor general, who represented Grayscale in his bullfighting case, won against the agency.
The Uniswap protocol
Concerning the Uniswap protocol that they developed, they believe that it represents an important innovation in the markets and that it directly benefits consumers.
It is a standalone software that allows users to transact directly with each other without intermediaries, without having to pay fees or rely on centralized intermediaries.
Additionally, this protocol can actually be integrated by anyone with an internet connection, even without relying on anyone else, not even Uniswap Labs.
They write:
“It just works. It has supported $2 trillion in trading volume without any hacks and has been integrated by thousands of teams and copied thousands of times.”
They also point out that many traditional markets are in reality neither efficient nor transparent, apart from the fact that they operate on limited days and schedules, sometimes with delays of several days, requiring various intermediaries who charge commissions which increase the costs for all users.
Uniswap requires transparent transactions that can be verified the same day, liquidation is immediate, and the service is available worldwide 24/7.
They add :
“These properties give individuals unprecedented authority to control what they own and create value on the Internet in new ways.”
The SEC defeated?
In recent years, the SEC has been defeated in court twice by crypto companies.
First from Ripple, which managed to convince a judge that XRP should not be considered an unregistered security when traded on the secondary market (exchanges).
After Grayscale successfully convinced a judge that the SEC’s opposition to approving spot Bitcoin ETFs was wrong, after the same agency instead approved futures ETFs on Bitcoin.
Apparently, this week the SEC could be defeated for the third time by the crypto industry, as it appears to be intent on approving the spot Ethereum ETFsdespite the claim that ETH should be considered an unregistered security.
It has always been clear that the SEC’s fight against the crypto sector was also a purely political initiative of part of the Democratic Party of the United States, around which the current head of the agency Gary Gensler revolves, and Given that in November they seriously risk losing the election, they could have decided to change course to avoid losing the crypto electorate.
The sacrificial victim at this point should be the same Gary Gensler, on whom the Democrats may end up placing full responsibility for their failure to attempt to come clean in this election year.