Uniswap Labs, the leading developer of the Ethereum decentralized trading platform, argued that the U.S. Securities and Exchange Commission’s (SEC) potential enforcement action lacks merit.
According to the New York-based startup, cryptocurrency tokens should not be classified as securities. Instead, it is a PDF-like file.
Why Cryptocurrency Tokens Are Not Securities
Uniswap Labs on Tuesday disputed claims that it was operating an unregistered exchange and broker-dealer. The response follows a notice sent to Wells by the SEC’s Enforcement Division last month, indicating plans to recommend legal action against the company.
Marvin Ammori, Chief Legal Officer of Uniswap Labs, highlighted the SEC’s incorrect assumption in a press conference that all tokens are securities. Uniswap Labs also argues that there is now a risk of the SEC making an unfavorable decision that could limit its authority over crypto tokens.
“A token is actually a simple file format. This is a file format for value and is not a security in nature. “The SEC would essentially have to unilaterally change the definitions of exchange, broker and investment agreements to capture what we are doing.” Ammori said.
Read more: How to Buy Uniswap (UNI) and Everything You Need to Know
In its 40-page response, the company asserted its confidence in its legal position, expressing readiness to file suit if necessary.
SEC Chairman Gary Gensler has consistently maintained that decentralized exchanges fall within the SEC’s regulatory scope. He said many digital assets are unregistered securities subject to SEC rules.
However, Uniswap Labs claims that the UNI token, as a governance token, does not qualify as a security under the Howey test. The legal standards of this Supreme Court decision define investment contracts.
In light of these developments, Uniswap’s UNI token has increased its value by 4% in the last 24 hours, trading at $9.63.
The broader cryptocurrency market is closely watching the SEC’s actions, especially as the U.S. election approaches and cryptocurrencies have become a key political issue. Some believe the SEC’s stance on cryptocurrencies may change. There are also expectations that the SEC will approve a spot Ethereum ETF on May 23rd.
This approval is believed to have been due to political pressure. Cryptocurrency enthusiasts speculate that the Biden administration and former President Donald Trump may have realized the growing influence of the cryptocurrency community.
Not to mention, Trump’s campaign recently indicated a more cryptocurrency-friendly approach by allowing donations through cryptocurrencies.
Read more: What does it mean to receive a Wells notice from the SEC?
“Biden and Trump are now trying to outdo each other while pandering to their crypto brethren. An absolute win,” said venture capitalist Nic Carter.
disclaimer
In compliance with Trust Project guidelines, BeInCrypto is committed to unbiased and transparent reporting. These news articles aim to provide accurate and timely information. However, before making any decisions based on this content, readers are encouraged to check the facts and consult with experts. Our Terms of Use, Privacy Policy and Disclaimer have been updated.