Regulatory tentacles reach into DeFi? Uniswap removes certain token interfaces in response to regulation, sparking controversy over censorship.

The decentralized exchange platform developer Uniswap Labs announced that due to the evolving regulatory environment, certain tokens will no longer be supported on the platform's frontend interface. However, they emphasized that the protocol itself continues to provide unrestricted access to anyone.

Support for 129 Tokens Discontinued

According to an announcement on 7/23 from the official Uniswap blog, Uniswap claims that due to the constantly changing regulatory environment, access to specific tokens on the app.uniswap.org frontend interface will be restricted.

129 tokens, including:

• Derivatives
• Equity tokens
• Tether Gold
• UMA Yield Dollar
• Options such as on-chain options protocol Opyn products
• Mirror stocks of synthetic assets like Synthetix, Mirror products

For the complete list of tokens, click here.

Recent Regulatory Trends

Recently, Binance has encountered situations where multiple international financial institutions have halted the provision of deposit and withdrawal services, and even equity tokens that were just launched have been forced to stop. Shortly after being introduced, it was announced that stock token trading would no longer be available on the trading platform.

In addition, SEC Chairman Gary Gensler recently hinted during an interview with the American Bar Association that some trading platforms offering currencies and derivatives tied to priced securities, where the prices depend on cryptocurrencies, may be subject to securities laws.

Community Response: A Bit Centralized?

Frank Chaparro, Director of News at The Block, questioned: "Is it inevitable for Uniswap to stop supporting specific tokens on the frontend? Is this in the long run beneficial for DeFi's appropriate regulation, or does it mean DeFi succumbs to regulators and thereby harm the market in the long term?"

Anthony Sassano, Co-founder of EthHub, responded:

This will benefit DeFi in the long run because it will force the public to stop using centralized frontend interfaces, and there is nothing more motivating for the public to change their habits than Uniswap Labs' decision.

He emphasized that some DeFi protocols have already blocked access from certain countries through the frontend, so Uniswap taking this step is not surprising.

Larry Cermak, Director of Research at The Block, has a negative view. He does not understand why Uniswap did not explain why there is "constantly changing regulation," and why regulations are effective globally. The announcement also seems like a verbose piece of nonsense.

Furthermore, this is a decision made by the developer Uniswap Labs. Although UNI token holders have no power to interfere, Larry believes that at the very least, holders should be informed about what happened, why this decision was made, and how to protect users' interests in the future.

Will Open-sourcing the Frontend Help?

Venture capital partner Adam Cochran believes: "Uniswap's decision to remove specific assets from the frontend shows that these frontends will be vulnerable to external pressure. Every protocol should have an open-source frontend, or at least an independent simplified version that can run locally."

Larry did not respond to Adam Cochran, but regarding the practice of open-sourcing the frontend, he stated:

The official interface is still the choice for the vast majority of new users because it has the highest SEO ranking to date, so if aggregators and competitors like SushiSwap do not follow suit by removing tokens from their interface, does it make sense for Uniswap to do so?

Larry emphasized that once regulators are aware of Uniswap's concessionary behavior, regulations will follow, and it will be inevitable that many DeFi tokens are classified as securities.

In addition to users being affected, the Mirror protocol forum has already initiated a proposal to shift liquidity to SushiSwap to resist censorship.

Uniswap: Decentralization Does Not Mean Doing as You Please

Uniswap founder Hayden Adams also responded:

Just a reminder:

• "Uniswap Protocol" is a completely decentralized, uncensored Ethereum smart contract
• "Uniswap Interface" is an open-source GPL codebase Note: GPL, General Public License

app.uniswap.org is a domain owned by Uniswap Labs, which points to the Uniswap interface on IPFS

Now is a good time to understand the difference between the interface and the protocol, as well as how decentralization works. Decentralization does not mean that Uniswap Labs will let you do as you please on its website. It means that you do not need a single interface to access the protocol.

In fact, most of the Uniswap trading volume does not come from the app.uniswap.org interface. This is due to the diffusion effect of on-chain integrations, and more interface choices: trading bots, wallets, forked versions of the interface because the interface is open-source, other interfaces, and DEX aggregators.

I believe that among all top protocols, Uniswap's level of decentralization still surpasses others. Because it has no admin keys, cannot be upgraded, has permissionless smart contracts, and lacks the ability for UNI holders to steal liquidity.