The U.S. Securities and Exchange Commission has sent a Wells notice to Uniswap, a decentralized trading platform.
On X (previously known as Twitter), Uniswap’s head legal advisor Marvin Ammori acknowledged the regulatory body’s formal warning on April 10. “The Wells notice we received concerning Uniswap today is a letdown, though it’s hardly surprising given the current SEC,” Ammori penned, making the case:
“If the SEC had authority over our self-custodial, non-intermediated products, it could tell us how to register them. It can’t and so it doesn’t. It has provided no clarity and no guidance — as several SEC commissioners have stated in multiple dissents.”
https://twitter.com/ammori/status/1778128325996675577
A Wells notice is an official communication sent by the SEC informing a company or person that the agency’s personnel plans to suggest taking enforcement action against them. The notice offers the party in question a chance to submit a written response or defense (known as a “Wells submission”) to argue against the proposed action.
Uniswap facilitates the automated exchange of tokens on the Ethereum blockchain, providing users with the ability to trade various cryptocurrency tokens directly without the requirement for traditional middlemen such as centralized exchanges.
Since 2021, the Securities and Exchange Commission (SEC) has been conducting an investigation into Uniswap Labs, the principal developer behind Uniswap. The decentralized exchange (DEX) has removed a number of tokens from its service in response to increasing scrutiny from regulatory authorities.
Uniswap Labs has previously argued in its defense that its role is limited to that of a software creator that developed the user interface for accessing the app. They maintain that this interface is distinct from the actual Uniswap protocol, which is a self-operating code made available for anyone to use.
“The Uniswap Protocol, along with its web application and digital wallet, do not conform to the regulatory classifications of a securities exchange or brokerage,” Ammori stated. He emphasized that the protocol is open to “regulations pertaining to cryptocurrency, and the transparent and well-defined legal standards anticipated in the United States, as opposed to capricious regulatory actions and the persistent misuse of authority.”
The SEC has previously issued comparable alerts, cautioning of potential legal proceedings against cryptocurrency platforms such as Coinbase and Binance.
As the U.S. Securities and Exchange Commission initiates new lawsuits targeting cryptocurrency platforms, the European Union is moving forward with the implementation of its Markets in Crypto-Assets (MiCA) regulation, which will apply to decentralized finance (DeFi) platforms and their interfaces.
The regulatory body of the European Union is mandated to compile a study by December 30, 2024, to evaluate the practicability of establishing targeted rules for the decentralized finance sector. This study will investigate the appropriate regulatory approach for decentralized platforms, especially those lacking a distinct issuer or service provider, within the European region.
