The US SEC would be losing “limited resources” by attempting to amend the definition of “exchange,” according to Uniswap.
Uniswap Labs, the developer of the decentralized exchange Uniswap, has recently requested that the US Securities and Exchange Commission (SEC) withdraw its proposal for regulating the decentralized finance (DeFi) market.
In April 2023 of the previous year, the securities regulator proposed to broaden the definition of what would qualify as an exchange in accordance with the Exchange Act of 1934. At that time, the SEC contended that the definition should encompass crypto market participants within the DeFi sector.
Uniswap has been contending against the SEC’s demand while opposing it. Unsiwap submitted an enhanced comment letter to the Securities and Exchange Commission (SEC) on Tuesday, July 9, in which it requested that the SEC withdraw its proposed amendments.
In its most recent arguments, Uniswap referenced the Supreme Court’s decision in Chevron, which established that courts would no longer be obligated to interpret ambiguous laws and differ from federal agencies.
Uniswap asserted that the US SEC would be spending “limited resources” by attempting to amend the definition of “exchange,” a decision that was already “likely to attract, and unlikely to survive, a judicial challenge” prior to the Chevron decision.
“Uniswap is certain that a reviewing court will conclude that the Commission’s interpretation of the Exchange Act extends the statutory text too far if the Commission proceeds forward with its proposed amendments.”
Furthermore, the decentralized exchange asserted that the SEC’s proposed amendments have a comprehensive scope and offer “no discernible limits” to the public. This would necessitate the SEC to continue the litigation on a case-by-case basis, which would lead to inconsistencies and a lack of clear guidance.
Uniswap stated in its blog post that the SEC “should not implement the proposed amendments.” “The Commission formulated the proposed amendments in response to a legal framework that is no longer in existence,” it further stated.
In the event that the SEC does not implement the amendments, Uniswap has stated that it should at least reopen the comment period for its proposal to enable the public to discuss the recent Chevron decision.
In April, the SEC issued a Wells notice to Uniswap, which formally informed the decentralized exchange of the SEC staff’s intention to recommend enforcement action against them. A month later, in a blog post, Uniswap criticized the SEC’s legal arguments as “poor” and stated its willingness to “fight” the matter in court if necessary.
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