Coinbase’s Chief Legal Officer calls US regulator’s Desire to “capture decentralized exchanges” irrational

Coinbase’s Chief Legal Officer Paul Grewal believes that the SEC should retract amendments to the crypto platform law that would give the regulator control over decentralized exchanges (DEXs).

The lawyer noted that the authorities’ desire to “capture decentralized exchanges” is irrational. It is based on the false assumption that DEXs can meet the same requirements as traditional trading platforms. For example, decentralized exchanges cannot follow the data disclosure rules developed for platforms that are managed by a centralized body, such as Coinbase.

The position of the US Securities and Exchange Commission, which assumes that all trading platforms must meet the definition of an exchange, “regardless of whether they call themselves centralized or decentralized,” is legally unfounded, Grewal is sure.

The proposed SEC amendment “has no visible limits” and after its adoption, the regulator will, according to a Coinbase representative, “continue to initiate unfounded lawsuits against crypto firms.”

The Supreme Court recently decided to cancel the so-called Chevron doctrine, which obliges judicial bodies to rely on the opinion of federal structures when interpreting ambiguous laws. According to a Coinbase representative, such an initiative suggests that the courts may not agree with the regulator’s position.

In April of this year, it became known about the claims of the US Securities and Exchange Commission against the largest decentralized exchange Uniswap. The regulator warned about the likely filing of a lawsuit against the company.

The UNI cryptocurrency, according to the SEC, is a security, and all token holders allegedly own a stake in Uniswap. Since the company has not conducted an IPO, the regulator considers UNI an illegal asset.

“These assertions assume that value represented in a specific digital file format is a security — and that the SEC can unilaterally extend the definitions of exchanges, brokers and contracts to the point of meaninglessness,” the company responded to the SEC’s claims.

And how do you assess the future prospects of DEX against the backdrop of attacks from the American regulator?