SEC Partners with Blockchain Analytics Firm to Monitor DeFi Space
AnChain.AI CEO Victor Fang says he is giving the SEC the power to “analyze and trace smart contracts”.
A spokesperson for AnChain.AI, a blockchain analytics firm, recently revealed a $600 000+ contract with the Securities and Exchange Commission to help the agency regulate and monitor the DeFi space.
AnChain’s Contract with the SEC
The contract – which began in May of 2021 – has an initial value of $125 000, which may escalate to $625 000 if the SEC chooses to retain the group for 5 more $125 000 ‘option’ years.
“The SEC is very keen on understanding what is happening in the world of smart contract-based digital assets,” says Victor Fang, CEO and co founder of AnChain.AI. “So we are providing them with technology to analyze and trace smart contracts”.
AnChain is focused on tracking illegal activity across crypto, DeFi, and traditional financial institutions alike. Besides helping the SEC investigate suspicious DeFi transactions and activity, they also work with centralized crypto exchanges and fiat institutions to build “preventive” defense against predatory actors in the space.
While some SEC (former) members have shown promise and faith in both crypto and decentralized finance, they continue to keep an eye out for the bad actors within the space. Earlier this month, SEC’s current commissioner Gary Gensler explained to WSJ why DeFi and “decentralized” operations still don’t get a pass on regulation:
“There’s still a core group of folks that are not only writing the software, like the open- source software, but they often have governance and fees…There’s some incentive structure for those promoters and sponsors in the middle of this.”
The DeFi industry is currently handling over $80 billion worth of digital assets. As the SEC continues its investigations, many of these assets are likely to be deemed securities.
SEC’s Ongoing Battle with Crypto
The SEC has had its plates trying to understand, analyze, and regulate cryptocurrency and DeFi projects. They’ve only recently reached a settlement for $12 million in penalties from three Bitconnect promoters, widely known as one of the biggest Ponzi schemes in the history of cryptocurrency.
Meanwhile, they are also sifting through a multitude of rising digital assets to determine whether or not they are securities. Hester Pierce encouraged DeFi projects to be proactive in getting approval from regulators earlier this year.
“When you start to look at the tokens themselves and try to figure out whether they’re securities, it does get kind of confusing… This is why I encourage individual projects to come in and talk to the SEC because it really does require a look at the very particular facts and circumstances.”