, 2 years ago

Uniswap facing regulation – Why is the SEC coming for DeFi?

Uniswap is the biggest DeFi protocol in the world. It not only played a significant role in making decentralised finance more popular, but it also paved the way for Ethereum to become the number one platform in terms of DeFi. But most recently, Uniswap came under scrutiny by the Security and Exchange Commission (SEC) in the United States.

Many true believers of decentralised finance have pointed out in the past that DeFi can never be regulated. The SEC, however, seems to be eager to find a way to classify what decentralised finance is doing and, in particular, Uniswap.

SEC has to prove a point

The SEC is eager to learn more about DeFi not only because it is new technology. Unlike many cryptocurrencies, including Bitcoin, DeFi protocols are often developed by companies instead of pseudonymous developers.

That being said, those companies might fall under the regulation of local authorities and are held to different standards. For now, it seems that the SEC has taken an interest in Uniswap Labs: the company that is responsible for the development of the most famous decentralised exchange in the world.

At the time of writing, the different versions of Uniswap hold a total value of 8 billion dollars (around 6,74 billion Euros). According to the Wall Street Journal, the SEC is particularly interested in the marketing of Uniswap and how the platform is used by its visitors.

What does this mean for UNI?

Even though it looks pretty spectacular that the SEC started investigations, there is no need to worry about it. In fact, Uniswap is entirely decentralised and the UNI token as well. Storing, sending and receiving UNI is as safe as it always has been.

Also, regulation is not a bad thing. It means that decentralised finance gets acknowledged, and just as all the laws and changes we have seen in the past few years didn’t stop Bitcoin, it is improbable that regulators will stop DeFi. It might even turn out to be a good thing to hold developers and companies to a higher or certain standard. After all, they are somehow affiliated with the money of investors who are using these protocols.

Crypto regulation has generally brought more protection for retail customers and turned out to be in their best interest. It is, therefore, not a bad thing at all if regulators are trying to get their grip around a market that is generally lacking centralised institutions.

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