Financial markets regulators are taking a closer look at the cryptocurrency space, and their attention is starting to turn to the decentralised finance space
The United States Securities and Exchange Commission (SEC) is investigating Uniswap Labs, the development team behind the decentralised exchange (DEX) Uniswap. This is according to a report by the Wall Street Journal on Friday.
The regulatory agency is seeking further information on how the cryptocurrency market works and has decided to launch an investigation into the decentralised finance (DeFi) space. According to sources familiar with the matter, the SEC wants to know how the Uniswap exchange is marketed and how investors use it.
Uniswap Labs has insisted that it will assist the regulatory agency with its inquiry. The SEC, on the other hand, declined to comment on the report. SEC chair Gary Gensler has previously talked about the need to properly regulate the cryptocurrency space.
According to the SEC chair, some of the tokens issued in the DeFi space are securities and, as such, fall within the jurisdiction of the regulatory agency. He stated that although the DeFi protocols have no central entity controlling its activities, the presence of fees and governance means that they fall within the purview of the SEC.
Gensler had asked the United States Congress to provide more resources and authority for the SEC to properly oversee the cryptocurrency market.
Uniswap is currently one of the largest decentralised exchanges in the world. It operates on the Ethereum blockchain which houses some of the leading DeFi protocols. The desire to regulate the crypto market stems from the massive growth experienced by the sector over the past few years.
The crypto market has reached a market cap of over $2 trillion, becoming one of the leading financial markets in the world. While the SEC is looking at the activities of the Uniswap Labs development team, the regulatory agency hasn’t made any allegations of wrongdoing at the moment.