Uniswap Labs has addressed a letter to the United States Securities and Exchange Commission (SEC) asking to reconsider its approach to expanding the definition of “exchange” to require registration of DeFi ecosystem participants.
In the recent letter from Uniswap Labs, which was addressed to the SEC, the organization that oversees the development of the decentralized exchange that bears the same name, has formally requested the securities regulator abandon its intention to expand the definition of "exchange" under the Securities Exchange Act of 1934.
According to the letter, sent on July 9 and signed by the DeFi platform's attorney, Donald Verrilli, the Securities and Exchange Commission's proposal has a high chance of being rejected in court for lack of a solid legal basis.
Uniswap Labs' lawyer cited in the letter the recent Supreme Court ruling on the Chevron doctrine, which could justify and support the SEC's actions. As this media reported, Chevron was finally revokedlIt's June, in a victory that the crypto community celebrated, since this limits and could reduce the power of federal agencies in the field of cryptocurrency regulation.
Due to the above, the DeFi platform recommended that the SEC desist from its intention to put decentralized platforms and participants in the DeFi ecosystem under its jurisdiction and suggested opening a new comment period to properly evaluate the impact of the decision made by the Supreme Court.
SEC's proposed change would be a waste of resources
According to Verrilli, if the SEC decides to move forward with the proposed change to expand the definition of an exchange, it risks wasting its limited resources.
“The Loper Bright ruling makes it almost certain that the interpretation of the definition of exchange adopted by the SEC to justify the proposed modifications will be rejected by the courts. There is no reason to spend the Commission's limited resources on this matter, nor to force the crypto sector to do the same, now that, for better or worse, the courts have rejected the proposed amendments., reads in the letter.
The Supreme Court ruling cited by Uniswap Labs rules that federal agencies can no longer rely on Chevron deference to justify their rules, thereby significantly limiting these agencies' ability to broadly interpret the statutes they apply.
Now that Chevron has been revoked, the SEC and other regulatory agencies cannot permissibly interpret statutes. Rather, they should focus on their interpretations being the “best reading” of the legislative text.
The SEC's extensive and unwarranted interpretation
So far, the US securities regulator has received nothing but criticism for the reactive and aggressive approach it has taken against cryptocurrencies and their participants. In this sense, Uniswap Labs argued that the SEC has proposed an extremely broad and unprecedented interpretation of the Securities Exchange Act, which seeks to include DeFi protocols under its jurisdiction.
However, according to the aforementioned law, an exchange is defined as “a market or facility for bringing together buyers and sellers of securities,” a definition that cannot be extended to include communication services or unaffiliated persons without a shared effort like platforms. DeFi, the company assured.
In addition to the Chevron reversal, Uniswap Labs also turned to the regulator's inefficiencies in cases such as Binance and Coinbase, in which courts have questioned and, in some cases, rejected the agency's attempts to enforce the laws. from securities to decentralized services.
The letter warns that continuing down this path will end in inconsistent results and leave relevant parties without clear guidance. Furthermore, the letter also represents the strong opposition that the crypto community has expressed against the SEC's proposed amendments to expand its jurisdiction over DEXs and DeFi participants.
