Uniswap challenges SEC: tokens, not securities, says chief legal officer

• Uniswap Labs responded to the SEC’s Wells notice by calling the legal arguments weak and saying it is ready to fight in court.

• The company emphasizes that tokens on Uniswap are not securities.

Uniswap [UNI], a leading decentralized exchange (DEX), is facing significant challenges and opportunities. Recently, the SEC issued a Wells Notice to the team, bringing Uniswap under regulatory control. Often a precursor to formal charges, this notice suggests potential regulatory action against Uniswap.

Uniswap responds to SEC, challenges agency’s jurisdiction

Uniswap Labs has turned to the Securities and Exchange Commission (SEC) to challenge the agency over its potential enforcement actions. The decentralized exchange archived a 43-page document that lists all the reasons why the SEC cannot regulate primary assets traded on the decentralized platform. The SEC had previously served Uniswap with a Wells Notice, flagging potential legal action.

Marvin Ammori, Chief Legal Officer of Uniswap Labs, promptly responded, affirming the project’s compliance with US regulations. Ammori argued that the SEC is overstepping its boundaries, targeting entities and individuals beyond its purview.

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Ammori also noted that the majority of Uniswap usage occurs outside of the United States, with 75% of usage and nearly 90% of trading volume occurring in other countries. He further argued that this places a limit on the extent to which the SEC can regulate the platform. Uniswap has already taken a position on the allegations made by the SEC and is ready to appeal to court if necessary.

Uniswap governance proposes a fee collection system

Amid such regulatory challenges, Uniswap’s governance mechanisms remain dynamic. Currently, under the vote of UNI token holders, scheduled for May 31, there is a rather important proposal. This proposal aims to create an automatic process of collecting and distributing commissions accrued from trades on Uniswap V3 pools. If implemented, this system will allocate collected fees proportionally to UNI holders who stake and delegate tokens. While the initial vote does not immediately implement fees, it sets the stage for future votes to finalize the fee specifications in Uniswap V3.

It also outlines recommendations for simplifying future tariff-related votes, increasing effectiveness and decreasing the burden of governance. This forward-thinking approach will ensure that Uniswap remains neutral, a cornerstone of the decentralized exchange model.

The proposal has already had a positive impact on the company’s performance in the UNI market. Currently, UNI is at $11.29, or a 5% increase in value at the time of writing this article. This increase can be attributed to the market’s confidence in the proposed governance changes and the positive impact on Uniswap tokenomics.

Consensys and Robinhood also in the SEC’s sights

Uniswap’s response comes against the backdrop of numerous legal battles between the SEC and other major cryptocurrency firms. Last month, Consensys he decided to sue the SEC before it could act after the company was issued a Wells Notice. The lawsuit alleges that the SEC behaved in a wayward manner and did not offer sufficient guidance, particularly on issues relating to Ethereum or ether as securities.

Additionally, Robinhood reported earlier this month that the agency had issued a warning to Wells regarding his cryptocurrency activity. The regulatory focus is on asset offerings, custody and operations provided by Robinhood Crypto. Robinhood explained that the possibility of enforcement action can lead to certain consequences, such as civil orders, administrative proceedings and fines.

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