CFTC Commissioners dissent on Uniswap settlement

The US Commodity Futures Trading Commission settled charges with Uniswap early today to the tune of $175,000.

Two commissioners, however, say regulators should never have brought the case in the first place.

Regulators claim Uniswap “illegally offered leveraged or margined retail commodity transactions in digital assets via a decentralized digital asset trading protocol.”

CFTC Commissioner Summer K. Mersinger issued a dissenting opinion following the settlement announcement, claiming that the case against Uniswap “has all the hallmarks of what we have come to know as regulation through enforcement.”

The settlement ultimately makes “sweeping statements” about the broader crypto industry and employs “legal theories” outside of a courtroom setting, Mersinger added.

Commissioner Caroline Pham issued a separate dissenting opinion, questioning how the CFTC came up with the charges in the first place, given there is “no evidence” that Uniswap ever advertised a leveraged token. It appears regulators are unfairly targeting decentralized finance, she alleged.

“Applying the logic of the CFTC’s legal argument, it seems that any commercial transaction to purchase a cow, a bushel of oats or a barrel of oil that involves the word ‘financed’ and is delivered in 30 days is a violation of [commodities laws] and needs to be executed on a futures exchange,” Pham wrote. “I am skeptical that the CFTC would try to enforce these statutory provisions outside of DeFi.”

It is not the first time either commissioner has expressed concern about how their agency approaches digital assets.

In October 2023 at the State of Crypto event, Mersinger said the only way forward for crypto regulation is through clarity from Congress.

“Until we offer some sort of clarity, we’re going to see this activity…move away from the US,” she said. “We could lose out on a lot of innovation and opportunities in our financial markets.”

As it currently stands, Mersinger added, it’s the enforcement teams at both the CFTC and US Securities and Exchange Commission that are determining which cases to bring, and therefore, making most of the rules.

In 2023, Pham also dissented against the CFTC’s interpretation of commodities laws when it comes to crypto lending, stating that she “cautioned” her fellow regulators of reaching beyond their authority.

Uniswap’s CFTC settlement comes months after the exchange received a Wells notice — a heads up that enforcement actions are incoming — from the SEC. In its response to regulators in May, Uniswap argued that the SEC lacks the authority to regulate bitcoin, ether or stablecoins, which are the primary assets traded on the Uniswap protocol.

Uniswap further asserted that tokens traded on its platform are not securities but rather alternative assets such as stablecoins, community and utility tokens and commodities. Uniswap also pointed out that — per its decentralized nature — the protocol does not maintain user accounts or collect personal data, complicating the SEC‘s push for increased transparency and regulatory oversight.

The SEC has not publicly announced charges against or a settlement with Uniswap. Uniswap did not immediately respond to Blockworks’ request for comment.

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