Top decentralized exchange (DEX) Uniswap has urged the US Securities and Exchange Commission (SEC) to drop its proposed attempt to expand the definition of an “exchange” to include DeFi markets, according to a July 9 letter.
Last year, the SEC proposed expanding the definitions of an exchange to include participants in the DeFi markets. However, this attempt has been met with strong pushback from the crypto community, which argued that it was part of the financial regulator’s attempt to regulate the industry by force.
Uniswap argument against SEC
The DEX, citing the recent Supreme Court ruling on the Chevron doctrine, argued that the SEC’s efforts would face significant legal challenges because it is “certain that the interpretation of the Exchange Act adopted by the Commission to justify the proposed amendments will be rejected by the courts.” The Chevron ruling was widely hailed by the crypto community, which believed it would end the SEC’s unilateral power over the emerging industry.
Uniswap continued that the SEC’s pursuit of this definition expansion would waste its limited resources. According to the firm, the regulator’s effort would draw several legal challenges, and it would be unable to rely on “the benefit of Chevron deference to defend its aggressive and atextual interpretation of its statutory authority.”
Uniswap further stated:
“The breadth of the proposed amendments would also require the Commission to continue down a path of regulation-by-enforcement, as the amendments themselves provide no discernible limits for the public, and the courts therefore would be required to identify and impose those limits in individual cases.”
Consequently, Uniswap urged the SEC not to adopt the proposed rulemaking expansion. It argued that the commission had drafted the amendments without a legal basis and called for the agency to reopen comments to consider the impact of the Chevron ruling.
Katherine Minarik, Uniswap’s chief legal officer, corroborated this view on social media. She urged the SEC not to proceed with its proposed rulemaking, adding that:
“For better or worse, the Supreme Court has rejected Chevron deference. The SEC’s proposal was flawed even with that deference — and it’s all the more so under today’s standard.”
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