The SEC’s recent moves against the decentralized crypto exchange, Uniswap, has crypto industry insiders questioning the consistency of policy enforcement from the regulatory body. Adam Cochran, from Cinneamhain Ventures, highlighted the discrepancy by analyzing the SEC’s former stands on what constitutes an “exchange”.
The SEC had previously, in 1986, 1991 and 1997 to be precise, issued “No-Action Letters” to entities figuring out how to electronically route and match trades, assuring them that this did not make them an “exchange”. Similarly, it had indicated that an interface that connects with an exchange is not, in and of itself, an exchange.
In 1998, the SEC declared that they would no longer be responding to such No-Action Letter requests. Cochran also noted that merely connecting purchasers and sellers does not make something an exchange, a stance that the SEC has been consistent on. Moreover, an asset’s primary listing channel was not deemed an exchange as long as transactions were not being absolved there.
Uniswap, which offers a platform for automated token exchanges on the Ethereum blockchain, has been under the SEC’s microscope since last year. The heat intensified on April 10th, when Uniswap Labs, the primary developer, was served a Wells notice, an indication that SEC staff are considering recommending enforcement action. As the sands shift, it remains to be seen how regulators will comprehend and adapt regulatory rules to the rapidly evolving field of crypto technology.