Uniswap Labs Settles with CFTC As NY AG Turns Up Heat

Uniswap Labs settled with the CFTC for $175K for illegal digital asset derivatives. Meanwhile, investors like a16z and Union Square Ventures got subpoenas from the NY Attorney General amid increasing regulatory scrutiny on the protocol.

What's the scoop?

• Leveraged Tokens: The CFTC cited Uniswap’s role in enabling the trading of leveraged tokens through its platform, which was not compliant with commodity laws.
• Commodities Classification: The CFTC reaffirmed that both Bitcoin and Ether are commodities, amid ongoing debate about their regulatory classification.
• Regulatory Cocktail: The action from the NY AG and CFTC, comes after the startup's April receipt of a Wells Notice from the SEC.

Bankless Take:

This continued onslaught against DeFi does not bode well for the September 10 hearing on DeFi. The $175K CFTC settlement and simultaneous issuance of subpoenas by the NY Attorney General’s office underscores the broader scrutiny the sector faces, with regulators focusing not just on the platforms but also on their backers. One particular commissioner, Summer Mersinger, spoke out against the settlement, saying, “the Commission appears to be taking the position that any DeFi platform could be liable for any and all conduct occurring on its protocol.”