Uniswap Labs, proprietor of the most important decentralized finance alternate Uniswap, is underneath investigation by the Securities and Trade Fee as DeFi breaks into the mainstream, in accordance with a brand new Wall Street Journal report.
The Journal report, citing individuals conversant in the matter, mentioned the SEC was wanting into “how buyers use Uniswap and the way it’s marketed.” The SEC did not remark to the Journal, whereas Uniswap mentioned it was dedicated to complying with the regulation.
At this level, the SEC’s investigation is underneath civil regulation, reasonably than felony regulation, and it could or might not result in fees. However the probe coincides with a separate SEC effort to achieve perception into crypto lending platforms, asking in letters for data on whether or not digital belongings must be SEC-registered securities, in accordance with the Journal.
Uniswap pitches buyers on its freedom of design, letting customers make their very own forex trades with out central approval. However as crypto and DeFi have come into regulators’ sights, Uniswap has been compelled to pare again a few of that freedom.
In July, Uniswap restricted sure trades in belongings like tokenized shares, citing the “evolving regulatory panorama.” Uniswap mentioned on the time that whereas its alternate restricted these trades, the underlying protocol, developed by Uniswap Labs on ethereum, is open supply and wouldn’t be affected.
The Uniswap buying and selling restrictions got here shortly after SEC Chair Gary Gensler made remarks that clearly hinted that digital belongings like tokenized shares have been prone to rely as securities – and thus platforms providing them have been seemingly operating afoul of the regulation.
“Make no mistake: It would not matter whether or not it is a inventory token, a secure worth token backed by securities, or every other digital product that gives artificial publicity to underlying securities,” Gensler informed the American Bar Affiliation.
“These platforms – whether or not within the decentralized or centralized finance house – are implicated by the securities legal guidelines and should work inside our securities regime.”