Uniswap Labs, the software development firm contributing to the Uniswap Protocol, has imposed limitations on several tokens. According to the firm, the tokens under question have always contributed a small portion of the volumes of the Uniswap protocol.
“To continue to innovate and provide this tool for the Uniswap community, we monitor the evolving regulatory landscape. Today, consistent with actions taken by other DeFi interfaces, we have taken the decision to restrict access to certain tokens through app.uniswap.org. These tokens have always represented a very small portion of overall volume on the Uniswap Protocol,” read the statement in part.
Restriction Only on Uniswap’s Interface
Uniswap also stated that the restriction would only apply to the Uniswap interface. However, the autonomous and decentralized smart contracts that run on the Uniswap protocol will still be open. Hence, anyone with an internet connection can still access the tokens using another portal on the protocol.
Uniswap also noted that the restriction would not impact the functionality of Uniswap’s Interface code. In its statement, Uniswap assured users that the interface will still be open source. The same will also apply to the other portals that are used to access the Uniswap protocol.
Uniswap labs also stated that steps will still be taken to update the offerings on the Uniswap Protocol. Moreover, the firm will add new offerings adhering to the changes in the broader DeFi market to “Provide safe, transparent and robust financial infrastructure that can empower users around the world.”
Uniswap published a list of all the tokens that will no longer be available on app.uniswap.org on a Github repository. The list published on the site includes more than 100 tokens categorized as options and derivatives, tokenized stocks, mirror stocks, and wrapped tokens that interact with mainstream protocols.
Uniswap has been keen on promoting an efficient and equitable financial environment, and these restrictions are one of the ways of doing this.
Regulatory Scrutiny on Tokenized Stocks
The restrictions by Uniswap coincide with the heightened regulatory scrutiny in specific tokens that have similar properties to token offerings. Because of the similarity, these products are subject to regulations before they are released or withdrawn from the open market.
Recently, the US regulator announced that they would heighten their oversight on these types of products, and in response to this, Uniswap cited that the evolving regulatory landscape was behind the firm’s decision.
Besides Uniswap, other crypto firms have also issued restrictions on tokenized offerings. Binance also recently imposed a similar restriction. However, Uniswap’s restrictions will only be limited to its interface. This means that users can still gain access to the tokens using alternative portals of the decentralized finance (DeFi) platforms that support the tokens.
Tokenized stocks have been a heated debate in the crypto industry for several weeks now, with different global regulators conflicted over how to regulate the products. This week, through its chair, Gary Gensler, the US Securities, and Exchange Commission (SEC) stated that platforms offering stock tokens need to register with the regulator. Gensler made the remarks in a speech before the American Bar Association.
According to Gensler, “It doesn’t matter whether it’s a stock token, a stable value token backed by securities or any other virtual product that provides a synthetic exposure to underlying securities.” All tokenized stocks needed to seek SEC registration and approval.
A stock token is a digital copy of a company’s share whose value is pegged to the value of that share. However, unlike in the traditional securities market, tokenized stocks are traded in fractional units.
The Commodity Futures Trading Commission (CFTC) has also formulated regulations in the tokenized stock market. According to the CFTC, some token offerings were susceptible to fraud and did not meet the legal threshold.
On July 16, Binance announced that it had halted the sale of digital tokens linked to securities after a series of warnings from different regulators. “Effective immediately, stock tokens are unavailable for purchase on Binance.com.” The centralized exchange also added that support for the stock token offerings would stop in October.
Binance was offering tokenized stocks from major companies such as Apple, Microsoft, and Tesla. Other centralized exchanges also followed suit in offering similar products, but if the ongoing regulations persist, such products will be phased out or require new registrations under new regulations.