Uniswap Labs, the developer behind the Uniswap Decentralised Exchange, has urged the SEC to drop its proposal to rule over Defi, citing a recent Supreme Court decision claiming that the proposed changes would intrude the SEC’s authority over the DeFi platforms and are likely to be rejected by the Supreme Court.

Uniswap Cites Supreme Court Ruling

Uniswap in the main argument cited the Supreme Court’s recent ruling in Loper Bright Enterprises v. Raimondo which changed the legal framework. This ruling overturned Chevron’s Deference, a long-standing practice that gives government agencies a lot of freedom in interpreting unclear laws.

Coinbase CLO Katherine Minarik explained that without Chevron Deference, the SEC’s interpretation lacks a solid legal foundation. Uniswap Labs claims that the current law doesn’t cover DeFi platforms and that the court is likely to reject the SEC’s proposed amendments. Notably, In a recent tweet, Katherine voiced that “Both the SEC and the industry have better ways to spend their resources than in litigation over an unlawful rule”.

Recently, the SEC issued a Wells Notice to Uniswap Labs in April, implying a potential legal action against the company. The notice alleged that Uniswap was conducting securities trading without registration as an exchange and as a broker. Uniswap Labs however defended itself stating that its protocol does not qualify to be termed as an exchange and rather it is a passive technology.

Uniswap Asks SEC To Reconsider Proposed Amendments

After the Supreme Court ruling, Uniswap Labs has suggested the SEC revisit the proposed amendments and extend the comment period. They claim that the legal environment has changed significantly to require new public participation. The original comments were made under a legal standard that assumed Chevron deference, which is no longer valid.

Uniswap has underscored the need for a review so that any new laws are consistent with the current legal framework and do not transcend the limits set by Congress. It also claimed that the proposed amendments would impede innovation and lead to legal ambiguities. It is also concerned that this might also negatively affect the Defi industry which handles trillions of dollars in transactions.  

Despite all of this, Uniswap is committed to legal compliance. Uniswap Labs is willing to challenge the SEC’s actions, which it views as politically motivated, and is prepared to continue the legal battle to the Supreme Court.

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