4 days after Uniswap Labs and the Uniswap Basis proposed merging their operations and activating the long-awaited price swap, a X spat between the protocol’s founder and Gary Gensler’s former chief of workers reopened wounds that the crypto business thought had healed.
The change wasn’t nearly a governance vote, it was a proxy struggle for a way Washington and Web3 keep in mind 2022, and whether or not decentralization was ever greater than regulatory theater.
Amanda Fischer, now at Higher Markets after serving as SEC chief of workers beneath Gensler, fired first.On Nov. 14, she posted that Uniswap’s proposal of consolidating Basis operations into the for-profit Labs entity whereas directing protocol charges to UNI token burns, mentioned:
“This web site is full of posts speaking about Uni’s swap to centralization as a result of it was by no means a core philosophical worth however a regulatory protect.”
Inside hours, Hayden Adams responded:
“You tried handy a centralized monopoly on crypto change within the US to FTX. I constructed the biggest decentralized market on this planet. And he or she says decentralization isn’t one in every of my values? This crashout is insane lmao. Not every little thing you learn on twitter is true Amanda.”
The ghost of SBF’s Washington playbook
Adams’s invocation of FTX wasn’t a rhetorical flourish, however a strategic excavation. In October 2022, one month earlier than his change collapsed, Sam Bankman-Fried (SBF) printed “Potential Digital Asset Trade Requirements,” a coverage framework that endorsed licensing DeFi entrance ends and requiring OFAC sanctions screening.
The proposal triggered rapid backlash from builders, who noticed it as a give up disguised as a compromise.
The talk crystallized in a Bankless episode, the place Erik Voorhees accused SBF of “glorifying OFAC” and undermining the core values of crypto.
Bankman-Fried countered that front-end licensing would protect permissionless code whereas satisfying regulators, a distinction critics discovered meaningless because the interfaces had been how most customers accessed protocols.
Concurrently, SBF turned probably the most distinguished business backer of the Digital Commodities Shopper Safety Act, a laws critics labeled the “SBF invoice” attributable to its compliance obligations that may successfully ban main DeFi providers.
The invoice died alongside FTX’s implosion, however the episode cemented a story: Bankman-Fried needed regulatory seize favoring centralized exchanges, and Washington was prepared to play alongside.
Fischer’s SEC tenure overlapped with this era. Whereas she has pushed for clear Administrative Process Act rulemaking, her document is unambiguously pro-enforcement.
In Congressional testimony, she argued that crypto can adjust to present securities legal guidelines. A latest evaluation co-authored by Higher Markets criticized the present SEC for “abandoning” its enforcement efforts.
Her philosophical alignment with vigorous regulation makes Adams’s accusation notably charged.
The price swap that took 5 years
The unification proposal represents real structural change. Since launching UNI in 2020, Uniswap Labs operated at arm’s size from governance, restricted in the way it might take part in protocol selections.
The price swap remained dormant regardless of repeated makes an attempt, every stalled by authorized ambiguity round whether or not activation would remodel UNI right into a safety.
The Nov. 10 proposal, co-authored by Adams, Basis Government Director Devin Walsh, and researcher Kenneth Ng, prompts protocol charges throughout Uniswap v2 and v3 swimming pools, directs proceeds to UNI burns, and instantly destroys 100 million UNI from the treasury.
Labs would additionally stop accumulating its personal interface charges, which have generated a cumulative whole of $137 million.
The merger folds Basis operations into Labs, creating “one aligned staff” for protocol growth. Critics see centralization as a downside, as fewer entities imply fewer checks.Supporters view effectivity as a profit, as fewer entities imply sooner execution. UNI surged as much as 50% on the information earlier than settling at $7.06 as of press time.
Fischer’s studying is that decentralization was all the time contingent, maintained when it supplied authorized insulation and deserted when financial incentives shifted.
Adams’s learn is that the transfer represents maturation, the place a protocol that survived 5 years of regulatory hostility can lastly align worth creation with governance.
What 2022 really seemed like
The Twister Money sanctions in August 2022 formed the context each events reference. When Treasury’s OFAC sanctioned the mixer protocol, it marked the primary time code itself confronted designation.
The motion compelled each DeFi builder to confront whether or not American customers might legally work together with their protocols and whether or not entrance ends bore legal responsibility.
SBF’s coverage be aware dropped two months later in that actual environment. His framework acknowledged the brand new actuality: if regulators might sanction protocols, the struggle over entry turned existential.
His reply, which concerned licensing the interfaces, screening customers, and maintaining code permissionless, struck many as capitulation to the very chokepoint mannequin crypto was designed to bypass.
The choice place, championed by builders like Voorhees and implicitly by Adams, held that any compromise on entry controls recreated TradFi’s gatekeeping in Web3 clothes.
Should you display screen customers on the entrance finish, you’ve already misplaced the permissionless sport.
Uniswap’s place mattered due to its scale. As the biggest decentralized change, now processing over $150 billion month-to-month and producing practically $3 billion in annualized charges, its compliance posture units business defaults.
Why this issues now
The present SEC has retreated from crypto enforcement beneath the brand new administration. Fischer’s Higher Markets evaluation explicitly faults this pullback.
For enforcement advocates, Uniswap’s unification is a victory slipping away after regulatory seize has succeeded.
For Adams and the DeFi group, the proposal represents earned autonomy after surviving years of hostile oversight that almost categorised UNI as a safety, creating such profound authorized uncertainty that the price swap remained dormant regardless of token holders’ needs.
The FTX reference cuts deepest as a result of it reframes the query of who was cooperating with whom. If SBF’s Washington agenda aligned with SEC preferences, then enforcement-minded regulators had been enablers of centralization, not protectors towards it.
Adams constructed permissionless infrastructure; Bankman-Fried lobbied for licensed chokepoints. One has survived regulatory scrutiny and now prompts worth sharing for token holders. The opposite collapsed into fraud.
Their X change crystallized three years of pressure right into a single query: was DeFi’s decentralization actual, or was it all the time contingent on regulatory comfort?
The $800 million token burn and 79% governance approval odds recommend the market has already chosen its reply.
