The SEC Shifts Gear: DeFi Governance Tokens Surge

Like many cryptocurrencies, governance tokens of DeFi projects have long been in the crosshairs of the SEC. But thanks to Trump’s pro-crypto policy, the commission has begun to relax its rules, and this fresh air has given a new lease of life to these governance tokens. For the past week, these tokens have outperformed the rest of the market.

The SEC proposes the implementation of regulations adapted to DeFi

Since the beginning of decentralized finance, governance tokens of DeFi projects have been monitored by the SEC. Indeed, the latter has long been wary of cryptocurrencies and the difficulty in defining their status. Moreover, these governance tokens can, even more than other cryptocurrencies, resemble certain characteristics of securities, as they can offer a redistribution of their revenues comparable to dividends.

However, since his election, Donald Trump has developed a pro-crypto voluntarism. Thanks to him, decentralized finance no longer lives under the continual fear of sanctions. Thus, the new SEC chairman, Paul Atkins, proposes creating a more flexible framework for DeFi companies, in a way an “innovation exemption” supported by the SEC.

American values of economic freedom, private property rights, and innovation are embedded in the DNA of the DeFi movement, or decentralized finance.

Paul Atkins

Among the projects that could benefit from this shift in direction, the decentralized exchange Uniswap is probably the most symbolic. Indeed, the UNI token currently only serves to decide the protocol’s direction. Unfortunately, it has already been threatened by the SEC to be considered a security. For this reason, the Uniswap team has always postponed its project to redistribute revenues to UNI token holders. This blockade can be lifted thanks to the SEC’s shift towards a more collaborative approach. The commission is now listening to industry players. The Clarity Act, which will provide a new framework for DeFi, will complete this new alliance between regulation and DeFi.

UNI, AAVE, and SKY accelerate their bullish trend

This new, more positive approach is very favorable for the major projects of decentralized finance. They have continued for years their technological development and rapprochement with TradFi institutions without clearly knowing when legal obstacles could be lifted.

Among DeFi projects, Uniswap, Aave, and Sky (formerly MakerDAO) are benefiting greatly from this SEC easing. The UNI token has risen by 23% over the last seven days, the AAVE token by 11%, and the SKY token by 13%. It is noteworthy that these three projects come from the Ethereum ecosystem, even though Uniswap and Aave have become multichain. What is even more surprising is that the dynamic between ETH and DeFi projects has reversed.

For a long time, it was the bullish trend of ETH that drove decentralized finance. On the contrary, it can now be observed that it is this finance that supports Ethereum and its token. In May, Uniswap generated a trading volume of 92 billion dollars, its fourth-best month since 2020. Moreover, a growing number of ETH are deposited on Aave and Sky to borrow stablecoins and thus obtain more liquidity for trading. The use of these projects has therefore become an essential element of demand for ETH.

Decentralized finance was just waiting for a final signal to conquer TradFi. This has been achieved with the recent changes in the attitude of the SEC, which has become much more favorable to DeFi. Since then, governance tokens have resumed an undeniable uptrend despite the slight correction in the last 24 hours.

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