Uniswap cites Chevron in another urge for SEC to drop bid to rule over DeFi

Uniswap Labs, the developer behind the Uniswap decentralized exchange, has again pressed the US Securities and Exchange Commission to drop its proposal to rule over decentralized finance (DeFi), citing a recent landmark Supreme Court decision.

Since at least April 2023, the SEC has proposed expanding the definition of what qualifies as an exchange in the Exchange Act of 1934 — explicitly arguing that it should include crypto market participants in DeFi.

Uniswap has been among those arguing against it. In a July 9 letter, Uniswap added further arguments following a comment letter it sent last month, calling for the SEC to drop its proposed amendments.

Its new argument is that with the Chevon decision — made during the Loper Bright Enterprises v. Raimondo Supreme Court case on June 28 — courts are no longer required to defer to federal agencies to interpret ambiguous laws.

Uniswap said this means the SEC will be merely wasting “limited resources” trying to get the definition of “exchange” amended, which had already been “likely to draw, and unlikely to survive, a judicial challenge” even before the Chevron decision.

“If the Commission moves forward with its proposed amendments, a reviewing court [...] is certain to conclude that the Commission’s interpretation of the Exchange Act stretches the statutory text too far.”

The protocol also argues that the proposed amendment’s breadth has “no discernible limits” to the public, meaning the SEC would need to continue litigating on a case-by-case basis in court, leading to inconsistencies and lack of clear guidance.

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“For all of these reasons, the Commission should not adopt the proposed amendments,” said Uniswap. “The Commission drafted the proposed amendments against a legal backdrop that no longer exists.”

It said that if it doesn’t adopt the amendments, it should, at the very least, reopen the comment period for its proposal so that the public can consider the recent Chevron decision.

In April, the SEC issued a Wells notice to the decentralized exchange — a formal notification to a company or individual that SEC staff intend to recommend enforcement action against them.

In a blog post a month later, Uniswap claimed the SEC had made “weak” legal arguments in issuing a Wells notice to the exchange and vowed it was “ready to fight” the matter in court if necessary.

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