Uniswap Restricts Fake-Stock Tokens as Regulatory Scrutiny Grows

By July 27, 2021Binance
Click here to view original web page at www.bloomberg.com

The regulatory pushback against recent innovation in the decentralized finance space is starting to leave a mark.

Uniswap Labs said late Friday that it was restricting access to dozens of tokens on its trading interface app, including synthetic assets meant to mirror the prices of stock-market giants like Facebook Inc. and Tesla Inc., as well exchange-traded funds such as Invesco’s so-called QQQ that tracks the Nasdaq 100 Index.

Uniswap said it monitors “the evolving regulatory landscape” and the restrictions were “consistent with actions taken by other DeFi interfaces.” However, the firm pointed out that the decision does not affect the underlying Uniswap Protocol that allows such assets to trade, or other interfaces used to access it. That means that the synthetic equities and other tokens can still be traded via other interfaces.

The move follows remarks by U.S. Securities and Exchange Commission Chairman Gary Gensler on July 21 that served as a warning to crypto projects meant to mimic the value of securities and skirt regulations governing exchanges and brokerages.

“Make no mistake: It doesn’t matter whether it’s a stock token, a stable-value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities,” Gensler said in the speech to an American Bar Association committee meeting. “These platforms — whether in the decentralized or centralized finance space — are implicated by the securities laws and must work within our securities regime.”

Other tokens restricted by Uniswap include those meant to track the value of gold and oil futures, the Japanese yen and Korean won, and synthetic versions of cryptocurrencies such as Litecoin and Bitcoin.

Uniswap’s move comes a week after centralized cryptocurrency exchange Binance Holdings announced that it was phasing out support for tokenized versions of stocks like Apple Inc., Tesla and Coinbase Global Inc. Hong Kong’s Securities and Futures Commission said it considered the tokens securities and that no Binance affiliates are licensed or registered to conduct “regulated activity” in Hong Kong.

Also this month, New Jersey ordered BlockFi Inc. to stop offering interest-bearing accounts, saying the financial services company is funding its crypto lending operations and proprietary trading in part through the sale of unregistered securities.

— With assistance by Joanna Ossinger, and Vildana Hajric

All Today's Crypto News In One Place