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Uniswap Proposes New Cross-Chain Standard as UNI Surges Despite SEC Showdown 

Last Updated May 22, 2024 4:12 PM
Shraddha Sharma
Last Updated May 22, 2024 4:12 PM

Key Takeaways

  • Uniswap Labs responds to SEC’s Wells Notice in a 40-page filing.
  • The Ethereum-based DEX has proposed a new cross-chain standard to improve decentralized trading.
  • UNI token surged nearly 40% over the week.

Uniswap Labs has filed a response to the SEC’s Wells Notice, challenging the SEC’s arguments against violations of US securities laws. Concurrently, Uniswap has proposed a new cross-chain standard to streamline and enhance decentralized trading systems.

Amid the developments, the UNI token has experienced a price surge, reflecting investor confidence as Ethereum sentiments remain broadly positive.

Uniswap’s Response to the SEC

The SEC previously argued that Uniswap’s operations might violate US securities laws. In a 40-page  defense, Uniswap Labs argues that secondary market trading does not constitute an investment contract. It notes that most of the trading volume on Uniswap involves Bitcoin, Ethereum, and stablecoins, or occurs in foreign transactions, challenging SEC’s jurisdiction.

Uniswap also emphasizes that its protocol was not designed for securities trading. Instead, it is a passive, internet-based communications protocol allowing users to post their trading interests online, similar to how HTML enables the display of digital content in web browsers, the filing outlines.

The Ethereum-based decentralized exchange also clarifies that the protocol is open-source and fully autonomous, with no control or maintenance by Labs.

“Just as Satoshi Nakamoto does not control Bitcoin, Labs does not control or maintain the Protocol or its use;” the filing states.

In a Wells Notice in April, the SEC officially intended to warn Uniswap of a potential lawsuit. The legal action could litigate whether Uniswap is an unregistered securities broker and exchange.

The protocol has asked to drop any enforcement action by stating that it does not match orders, bring together buyers and sellers, or constitute a marketplace, like a securities exchange.

Uniswap’s filing also addresses broader legal and constitutional issues by questioning the SEC’s congressional authorization.

In addition, Uniswap argues that the SEC has not provided fair notice that its activities could violate securities laws.

Uniswap’s New Cross-Chain Standard Amid Legal Action

Uniswap Labs and Across have jointly proposed a new standard for cross-chain intents under ERC-7683 . The standard aims to establish a unified framework for specifying cross-chain actions.

The ERC introduces a standard way to handle cross-chain trades. This includes a set of essential details like contract and user addresses, and order deadlines. It ensures that settlement contracts follow the same rules, making cross-chain orders easier to manage.

The main goal is to improve user experience by boosting liquidity, cutting costs, and reducing wait times. The proposal could allow different systems to work together and share resources, potentially leading to better and more reliable settlements.

Uniswap’s Market Performance Turn Positive

Uniswap is a dominant player in the DeFi space, with a total value locked (TVL) of $6.294b as per  DefiLlama.

The response to SEC Wells notice and the ERC proposal comes at a time when Ethereum sentiments are positive. The first set of Ethereum ETFs could potentially get approved in May, creating momentum for the Uniswap UNI token.

The token is inching close to a market capitalization of $7b at the time of writing.

UNI/USDT Trading Chart | Source:TradingView
UNI/USDT Trading Chart | Source:TradingView

The token’s weekly rise is now close to 40%, with significant gains observed between May 21 and May 22. The surge indicates strong market confidence in Uniswap’s ability to fight the SEC, coupled with other market developments.

UNI Could Surge Further

The UNI token’s recent price surge is a positive signal for Uniswap, reflecting investor confidence against regulatory scrutiny.

In addition, Uniswap’s proposal for a new cross-chain standard is positive for advancing it in the decentralized finance market while addressing legal challenges.

The UNI token’s trajectory could continue to rise, especially with the potential approval of Ethereum ETFs adding further momentum. As such, while the current outlook is positive, the outcome of the SEC’s actions and broader market developments will be crucial in shaping UNI’s future.

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