Uniswap Cites Chevron in Attempt for SEC to Discard Changes to Rule over Decentralized Finance

Uniswap Labs claims the SEC’s suggested legal changes to offer it power over decentralized finance are being made against a ‘nonexistent legal framework.’

Uniswap Labs has compelled the United States Securities and Exchange Commission (SEC) to do away with its proposal to rule over decentralized finance (DeFi), quoting the latest verdict by the Supreme Court. Since April last year, the Securities and Exchange Commission has suggested expanding the definition of an exchange in the Exchange Act of 1934, clearly claiming it must incorporate market participants in decentralized finance. 

Unswap Opposes Expanding Exchange Definition

Uniswap is one of the exchanges arguing against it. A July 9 letter included additional arguments after a comment letter sent in June, suggesting the need for the Securities and Exchange Commission to do away with its suggested changes.

According to the new arguments, the Chevon decision eliminates the need for courts to defer to general agencies to interpret vague regulations. The decision was made during the Loper Bright Enterprises versus Raimondo Supreme Court case. 

Per Uniswap, it means that the Securities and Exchange Commission will be wasting ‘few resources’ attempting to have the definition of ‘exchange’ revised. Even prior to the Chevron verdict, the amendment was ‘likely to draw and unlikely to survive a judicial challenge.’

In case the Commission moves forward with the proposed revision, a review court will deduce that its interpretation of the Exchange Act stretches the statutory text extensively. Further, the protocol shows that the scope of the suggested amendment has ‘no apparent restrictions’ to the public. This indicates that the Securities and Exchange Commission would need to continue petitioning on a case-by-case basis in court, resulting in irregularities and the absence of vivid guidance.

Unswap Urges SEC to Drop Suggested Amendments

Uniswap claimed that the Commission must refrain from implementing the suggested amendments. The Commission created the proposal against a nonexistent legal setting. It claimed that in case the amendments are not adopted, it must, at least, reopen the comment timeframe for its proposal to enable the public to consider the latest Chevron verdict. 

In April, the decentralized exchange received a notice from the Securities and Exchange Commission that gave a Wells Notice. The notice is an official notification to a person or from that SEC personnel plan to suggest enforcement action against them.

In a June blog post, Uniswap noted that the Securities and Exchange Commission had made ‘shaky’ legal arguments in giving a Wells notice to the exchange and swore it was ‘prepared to battle’ the issue in court if needed.