The US Securities and Exchange Commission (SEC) has concluded its investigation into Uniswap Labs without taking any enforcement action, as stated in a press release on February 25. The investigation, which lasted over three years, focused on allegations that Uniswap Labs operated as an unregistered broker, exchange, and clearing agency, and issued an unregistered security.
Uniswap Labs sees this outcome as a victory for decentralized finance (DeFi), highlighting that decentralized technology operates within the legal framework. In April, the SEC issued a Wells notice to Uniswap Labs, outlining potential charges related to unregistered securities activities. However, the investigation has now concluded, and no further legal action is planned.
Jake Chervinsky, the chief legal officer at Variant Fund, congratulated Uniswap on receiving a “clean bill of health from the SEC.” He also expressed his frustration with major crypto players wasting time and resources fighting against regulatory overreach.
Following the news, Uniswap’s governance token, UNI, experienced a 5% jump in value, rising from $7.87 to $8.28, according to CryptoSlate data.
Throughout the investigation, Uniswap Labs consistently maintained that it does not operate as a broker, the Uniswap Protocol does not qualify as an exchange or clearing agency under US securities law, and UNI is not a security.
Hayden Adams, the founder of Uniswap, criticized the SEC’s initial approach, stating that it is part of a broader pattern of regulatory enforcement applied arbitrarily to DeFi projects without clear legal grounds. Adams argued that the SEC attempted to impose a regulatory framework designed for centralized financial institutions on decentralized networks, failing to recognize the structural differences between the two systems.
Adams emphasized that self-custodied funds and self-executing smart contracts on public blockchains provide transparency that is absent in traditional finance markets. He believes that existing regulatory approaches are ill-suited for DeFi.
Adams sees the investigation as a significant burden on Uniswap Labs, diverting resources and causing stress associated with federal investigations. He believes that the investigative process serves as a punitive measure, discouraging innovation within the US. However, Adams remains optimistic about working with Congress and regulatory bodies to establish clear rules tailored to DeFi. He also stressed the need for regulatory frameworks that acknowledge the unique nature of decentralized financial technologies while promoting transparency, access, and innovation.
In conclusion, the SEC’s closure of the investigation into Uniswap Labs without taking enforcement action is seen as a victory for DeFi. Uniswap Labs and its founder, Hayden Adams, hope to work with regulators to establish clear rules that recognize the unique characteristics of decentralized finance.
