Uniswap Labs is mounting a robust challenge against the US Securities and Exchange Commission's (SEC) proposed rulemaking efforts. These efforts aim to expand the definition of a crypto 'exchange' under US securities laws to include decentralized finance (DeFi) platforms. This challenge is framed within a detailed letter to the SEC, bolstered by recent Supreme Court decisions that could influence the interpretation and enforceability of such regulatory expansions.

Uniswap's Legal Stand

Katherine Minarik, the Chief Legal Officer of Uniswap Labs, revealed the company's step in a post on X. She cited the US Supreme Court's recent judgment rejecting the application of Chevron deference in federal agency rulemaking.

"For better or worse, the Supreme Court has rejected Chevron's deference. The SEC's proposal was flawed even with that deference -- and it's all the more so under today's standard," Minarik stated.

The Chevron deference historically allowed courts to defer to a federal agency's interpretation of an ambiguous statute within its jurisdiction.

The landmark decision in Loper Bright Enterprises et al. v. Raimondo ruled that federal agencies must adhere more strictly to the statutory text. This decision has significant implications for the SEC's current enforcement actions against the entire crypto industry.

The SEC's Proposal

In the letter, Uniswap Labs details its position against the SEC's proposal to amend the definition of a crypto 'exchange' as outlined in the Securities Exchange Act of 1934.

This Act defines an exchange as "a marketplace or facilities for bringing together purchasers and sellers of securities." The SEC's proposed changes seek to extend this definition to include traditional securities trading platforms and decentralized protocols like Uniswap.

Uniswap Labs argues that the SEC's broader definition is unsupported by the statutory language of the Exchange Act. The letter claims that expanding the definition to include decentralized networks and technologies goes beyond the scope of the Act and would likely face legal challenges based on the recent Supreme Court decision.

According to Minarik, this could lead to "an unlawful rule" that would waste the resources of both the Commission and the industry.

Legal Repercussions

The letter further emphasizes the potential legal repercussions by citing two recent court cases: SEC vs. Binance Holdings and SEC vs. Coinbase.

In both cases, federal courts expressed skepticism about the SEC's approach to regulating the entire crypto industry through enforcement actions rather than explicit, established rules.

According to Uniswap Labs, these cases illustrate the judicial pushback against applying traditional securities laws to the decentralized aspects of the crypto market. This could indicate the likely reception of the SEC's proposed rule changes in the courts.

Uniswap's correspondence also suggests that the SEC should consider the impact of the Loper Bright decision and reopen the comment period for its proposal. This would allow for additional industry input considering the changed legal landscape post-decision.