TL; DR
Full story
Very rarely we update the title of this section…
But we did that today, because this story should take the lead over all the others (and certainly doesn’t fit the title of “This is Cool”).
Okay, let’s rip off the band-aid:
Yesterday, the SEC informed Uniswap that it intends to take an enforcement action against the company.
This could end up being the greatest test ever administered to the decentralized economy – but will inevitably end in failure for the SEC and (unfortunately) for the US as a whole.
Because this is what it’s all about…
There is “Uniswap, the decentralized trading platform” – where users can trade/borrow among themselves without the need for an intermediary.
And there’s “Uniswap, the open protocol” – the coded ruleset that makes trading possible (that anyone can build on top of).
That sounds confusing…
But look at what you’re doing now (reading email) – it’s pretty much the same, but we’re exchanging information instead of crypto…
There is “Email, the platform.”
Suppose you’re reading this on Gmail: What would happen if the SEC were to push Google into oblivion and take Gmail with it?
Would that be the end of email? Not really! You’d just send back to Apple Mail, or Outlook, or Proton Mail, or one of the hundreds of other platforms that use:
“Email, the protocol.”
In other words: the Simple Mail Transfer Protocol (SMTP) – a protocol that is Open (also: owned by NO ONE).
And like SMTP, Uniswap’s open protocol is not proprietary; they simply connect to it, alongside a range of other decentralized exchange platforms (in the same way that email platforms connect to SMTP).
Here’s why the SEC’s failure is inevitable:
Sure, the Commission might be able to cheat Uniswap (the platform) out of a few million/billion in settlement fees and walk it off as a win… but when it comes to suing an open protocol, well – they can’t. It is a thing, not an entity.
(It would be like trying to sue your bed stand after stubbing your toe on it for the hundredth time).
And of course they can order Uniswap to shut down the protocol all they want… but again, it’s not going to work! Because Uniswap (the company) no longer owns/controls the protocol.
This is what will make the US stiff:
If the SEC succeeds in shutting down the Uniswap platform, it will only lead to other (offshore) platforms emerging to replace it.
Pushing Violently pushing innovation and growth out of the country.
@GaryGensler: two emphatic thumbs down.