Commissioner Summer K. Mersinger voiced strong opposition to the Commodity Futures Trading Commission’s (CFTC) decision to impose a $175,000 fine on Uniswap Labs for its illegal digital asset derivatives trading.
In her dissent, Mersinger criticized the agency’s reliance on “regulation through enforcement,” arguing that the approach risks stifling innovation in DeFi and driving developers out of the US.
She added:
“This case bears the hallmarks of regulation through enforcement,” “Rather than providing clarity for DeFi protocols, we penalize those trying to comply.”
Enforcement action
The CFTC’s enforcement action targeted Uniswap Labs for its role in facilitating trading through its decentralized exchange (DEX). The protocol allows users to create liquidity pools to trade pairs of digital assets, including leveraged tokens.
These tokens provide exposure to price movements of assets like Bitcoin and Ethereum and allow users to trade with leverage — amplifying potential gains and risks.
According to the CFTC, the leveraged digital asset transactions conducted on the Uniswap DEX constituted retail commodity contracts, which must be conducted on a registered contract market under US law.
Uniswap had not registered its platform with the CFTC, which led to the violation. The order also found that these transactions did not result in the actual delivery of the assets within 28 days, further solidifying the need for regulatory oversight.
As part of the settlement, Uniswap Labs agreed to pay a $175,000 fine and to cease and desist from further violations of the CEA. The CFTC acknowledged that Uniswap had cooperated with the investigation, which contributed to the reduced penalty.
The DeFi platform is also facing regulatory action by the SEC, which recently issued a Wells Notice against the firm.
Concerns about innovation
Mersinger’s dissent warned that the CFTC’s approach could push responsible DeFi developers overseas, leaving behind actors with less concern for regulatory compliance.
She highlighted that Uniswap Labs had taken steps to block certain leveraged tokens following a previous CFTC enforcement action, but the current settlement still penalized the company for actions before those blocks were implemented.
According to Mersinger:
“This settlement creates a precedent that could deter innovation and compliance.”
She called for the CFTC to engage in rulemaking that provides clearer guidance for DeFi platforms rather than relying solely on enforcement actions.
The Uniswap Labs settlement highlights the ongoing debate over how regulators should approach the rapidly evolving DeFi sector. While the CFTC has taken an enforcement-driven approach, voices like Mersinger suggest that a more collaborative regulatory framework may be needed to foster innovation while ensuring compliance.
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