DeFi in the line of fire of regulators -It‘s been almost 2 years since decentralized finance (DeFi)
has been booming. In that time, the ecosystem has grown from a valuation of a few million to over $177 billion. Plagued by numerous hacks and scams, it is now in the crosshairs of US financial regulators.
The SEC wants to know everything about Uniswap
On September 3, the Wall Street Journal revealed
that the US SEC had begun investigations into Uniswap Labs, the startup responsible for developing the eponymous decentralized exchange protocol. According to sources close to the case, it would seem that the SEC is initially seeking to understand how the platform works and how it is used by investors. For
its part, the Uniswap Labs team, interviewed by our colleagues at the Wall Street Journal, announced its desire to fully cooperate with regulators:
“We are committed to complying with the laws and regulations that govern our industry and to providing regulators with information that will assist them in any investigation. “
Uniswap Labs announcement There
is nothing very surprising about this investigation. After all, Uniswap is by far the most used decentralized exchange platform in the ecosystem. It records $1.4 billion in volume across the various versions of its protocol deployed on the Ethereum mainnet.
What’s more, Uniswap launched its governance token, UNI, almost a year ago. As a result, the SEC is also looking into the nature of this token to ensure that it does not fall into the securities category .
DeFi, a new target for regulators
While regulations relating to the crypto ecosystem are struggling to be put in place internationally, financial regulators are now starting to take a closer look at what is happening in the DeFi ecosystem.
Indeed, the current head of the SEC, Gary Gensler, was already calling the DeFi ecosystem the Wild West, in early August during a speech at theAspen Security Forum
, because of the lack of investor protection.
Furthermore, he pointed to the lack of clarity regarding the assets that are created in the ecosystem, arguing that some were securities
. According to this definition, their issuers would have proceeded to unregulated token sales.
For Sarah Brennan, a lawyer specializing in blockchain cases, the SEC’s interest could be a “big deal”:<
>”We should expect the SEC under Gensler to be an aggressive regulator, both in terms of scope and enforcement efforts.”
However, as Jake Chervinsky, general counsel at Compound, pointed out, SEC investigations do not necessarily imply wrongdoing.
<img src=”//www.w3.org/2000/svg’%20viewBox=’0%200%200%200’%3E%3C/svg%3E” alt=’Twitter post by Jake Chervinsky announcing that the SEC’s investigations did not necessarily imply wrongdoing by DeFi” /><img src=”https://yellowrocketagency.com/wp-content/uploads/2021/09/img_613971f96b280..png” alt=’Twitter post by Jake Chervinsky announcing that the SEC’s investigations did not necessarily involve wrongdoing by decentralized finance (DeFi)” />Post by Jake Chervinsky – Source: Twitter
“Assuming this report is true, it shouldn’t be a surprise to anyone who has seen Chairman Gensler’s recent comments on DeFi. Nor should it worry too many people(for now). An investigation is ‘not’ an allegation of wrongdoing. It’s just the way the SEC gathers information. “
Jake Chervinsky In any
event, Uniswap is not the SEC’s first strike. Indeed, in early August 2021, it had already sued the DeFi Money Market protocol
, accusing it of conducting unauthorized sales of financial products.
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