Commissioner Summer K. Mersinger voiced strong opposition to the Commodity Futures Trading Commission’s (CFTC) decision to impose a $175,000 fine on Uniswap Labs for its illegal digital asset derivatives trading.
In her dissent, Mersinger criticized the agency’s reliance on “regulation through enforcement,” arguing that the approach risks stifling innovation in DeFi and driving developers out of the US.
She added:
“This case bears the hallmarks of regulation through enforcement,” “Rather than providing clarity for DeFi protocols, we penalize those trying to comply.”
Enforcement action
The CFTC’s enforcement action targeted Uniswap Labs for its role in facilitating trading through its decentralized exchange (DEX). The protocol allows users to create liquidity pools to trade pairs of digital assets, including leveraged tokens.
These tokens provide exposure to price movements of assets like Bitcoin and Ethereum and allow users to trade with leverage — amplifying potential gains and risks.
According to the CFTC, the leveraged digital asset transactions conducted on the Uniswap DEX constituted retail commodity contracts, which must be conducted on a registered contract market under US law.
Uniswap had not registered its platform with the CFTC, which led to the violation. The order also found that these transactions did not result in the actual delivery of the assets within 28 days, further solidifying the need for regulatory oversight.
As part of the settlement, Uniswap Labs agreed to pay a $175,000 fine and to cease and desist from further violations of the CEA. The CFTC acknowledged that Uniswap had cooperated with the investigation, which contributed to the reduced penalty.
The DeFi platform is also facing regulatory action by the SEC, which recently issued a Wells Notice against the firm.
Concerns about innovation
Mersinger’s dissent warned that the CFTC’s approach could push responsible DeFi developers overseas, leaving beh
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Author: Assad Jafri
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