Commissioner Summer season Ok. Mersinger voiced robust opposition to the Commodity Futures Buying and selling Fee’s (CFTC) choice to impose a $175,000 high-quality on Uniswap Labs for its unlawful digital asset derivatives buying and selling.
In her dissent, Mersinger criticized the company’s reliance on “regulation by way of enforcement,” arguing that the strategy dangers stifling innovation in DeFi and driving builders out of the US.
She added:
“This case bears the hallmarks of regulation by way of enforcement,” “Reasonably than offering readability for DeFi protocols, we penalize these attempting to conform.”
Enforcement motion
The CFTC’s enforcement motion focused Uniswap Labs for its function in facilitating buying and selling by way of its decentralized change (DEX). The protocol permits customers to create liquidity swimming pools to commerce pairs of digital belongings, together with leveraged tokens.
These tokens present publicity to cost actions of belongings like Bitcoin and Ethereum and permit customers to commerce with leverage — amplifying potential features and dangers.
Based on the CFTC, the leveraged digital asset transactions carried out on the Uniswap DEX constituted retail commodity contracts, which should be carried out on a registered contract market underneath US regulation.
Uniswap had not registered its platform with the CFTC, which led to the violation. The order additionally discovered that these transactions didn’t end result within the precise supply of the belongings inside 28 days, additional solidifying the necessity for regulatory oversight.
As a part of the settlement, Uniswap Labs agreed to pay a $175,000 high-quality and to stop and desist from additional violations of the CEA. The CFTC acknowledged that Uniswap had cooperated with the investigation, which contributed to the decreased penalty.
The DeFi platform can be dealing with regulatory motion by the SEC, which lately issued a Wells Discover towards the agency.
Issues about innovation
Mersinger’s dissent warned that the CFTC’s strategy may push accountable DeFi builders abroad, abandoning actors with much less concern for regulatory compliance.
She highlighted that Uniswap Labs had taken steps to dam sure leveraged tokens following a earlier CFTC enforcement motion, however the present settlement nonetheless penalized the corporate for actions earlier than these blocks had been applied.
Based on Mersinger:
“This settlement creates a precedent that would deter innovation and compliance.”
She referred to as for the CFTC to interact in rulemaking that gives clearer steerage for DeFi platforms quite than relying solely on enforcement actions.
The Uniswap Labs settlement highlights the continued debate over how regulators ought to strategy the quickly evolving DeFi sector. Whereas the CFTC has taken an enforcement-driven strategy, voices like Mersinger counsel {that a} extra collaborative regulatory framework could also be wanted to foster innovation whereas guaranteeing compliance.
