NOIDA (CoinChapter.com) — The US Securities and Exchange Commission is at it again, and this time the SEC has given notice to Uniswap. The financial regulator sent a Wells notice to Uniswap, indicating potential enforcement for operating as an unregistered securities exchange.
The move shook the DeFi sector, sparking concerns about similar actions against other DEX tokens. As the news spread, the top DEX tokens (by market cap) started to collapse.
While most of the DEX tokens have been in a downtrend over the past seven days, news of the SEC Wells notice to Uniswap is unlikely to act as a bullish cue for the sector.
The SEC notice to Uniswap raised questions about the future of DEX tokens, including UNI, Uniswap’s native token. Moreover, potential implications for similar platforms stirred market anxieties, with market participants speculating on the broader impact on the decentralized finance (DeFi) sector.
Should the SEC follow its notice to Uniswap with a lawsuit against the DEX, other DEX platforms would likely see their tokens drop. Traders would likely panic sell DEX-related tokens until the firms clarify their legal and regulatory status.
Any DEX that manages to get regulatory clarity from Gensler’s SEC would certainly attract a horde of buyers. For now, though, it is a bad time to be a DEX token, and a DEX token holder.
Uniswap Responds To SEC Notice
Uniswap responded to the SEC notice with a blog post, stating that its platform and the UNI token comply with existing laws. The blog also highlighted the legal complexities faced by decentralized platforms.
Uniswap assured users that its “entire suite of current products” would remain available to customers despite the SEC notice. The DEX argued the SEC lacked congressional authority to regulate crypto tokens as securities, emphasizing that crypto tokens do not qualify as “investment contracts” under existing laws.
The blog referenced court decisions, like the decision SEC vs. Ripple (ouch), to highlight that secondary market transactions in digital assets generally do not constitute investment contracts.
Moreover, Uniswap also referenced congressional testimony to argue that current laws do not adequately cover DEX operations or token classifications. Uniswap highlighted its legal victories, asserting that its platform and tokens operate legally within the decentralized finance ecosystem.
Uniswap Labs founder Hayden Adams shared a post on X, saying he was not surprised by the SEC notice, only “annoyed, disappointed, and ready to fight.”
Yet, Consensys senior counsel and regulatory matters director Bill Hughes clarified that the SEC has not filed a suit against Uniswap. Instead, the regulator simply informed that they are planning to file one.
Given Gary Gensler‘s history, it is almost certain that a suit will follow soon.
The DeFi community rallied around Uniswap, showing strong support and emphasizing the importance of navigating regulatory challenges together. The SEC notice to Uniswap underscores the ongoing dialogue between regulatory bodies and the DeFi world, shaping the future of decentralized finance.
UNI Price Plunges, But Bulls Fight Back
Following news of the potential lawsuit, UNI price fell sharply. The token dropped nearly 23% since April 10 to reach a daily low near $8.7 on April 11. However, the wick at the bottom of the day’s candle indicates that buyers returned to the market following Uniswap’s promise of a fightback.
Yet, it is likely that UNI price would continue paring gains and drop to its 200-day EMA (green wave) support near $8.4.
Breaching the immediate support could lead to UNI price testing the 0.236 FIB level support near $7.06.
On the flip side, as the community bands together following the SEC notice to Uniswap, once the FUD clears, buyers could re-enter the market, driving the token’s price to the resistance near $10.7.
Flipping the immediate resistance would help Uniswap price target the resistance near $12.4 before correcting.
The relative strength index for UNI remained neutral, albeit on the oversold threshold, with a score of 30.84 on the daily chart.
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