The US Securities and Exchange Commission (SEC), a US agency that overlooks the stock markets, has hired a blockchain analytics firm to help monitor and regulate the burgeoning decentralized finance industry ( DeFi), according to a weekend report in Forbes.
Spy on transactions
Signed with AnChain.AI, the initial contract value is $ 125,000, with five separate one-year option years of $ 125,000 for a total of $ 625,000. The company is a San Jose-based blockchain startup that focuses on tracking illicit activity on cryptocurrency exchanges, DeFi protocols, and traditional financial institutions.
It recently raised more than $ 10 million from a Susquehanna Group affiliate at an undisclosed valuation to bolster its technology stack.
In addition to monitoring known crypto wallets linked to hackers and bad actors, AnChain.AI's predictive engine claims to identify unknown addresses and transactions that could be suspicious.
This structure allows the company to become a predictive product that alerts of imminent risks instead of one post-incident, a feature that appears to have piqued the SEC's interests.
It marks one of the first instances of a government body signing a blockchain player to look for illicit transactions and is part of a broader movement towards regulation of the cryptocurrency sector in recent times.
“The SEC is very interested in understanding what is happening in the world of smart contract-based digital assets… which is why we are providing them with technology to analyze and track smart contracts,” said the CEO and co-founder of AnChain.AI , Victor Fang, in a statement.
DeFi Sector Warning
Earlier this month, SEC Chairman Gary Gensler warned that DeFi operators were akin to the "promoters" and "backers" who were involved in both creating and marketing their projects to the masses.
"There is still a core group of people who are not just writing the software, like open source software, but often have governance and fees … There is an incentive structure for those promoters and backers in the middle of this," Gensler said. in the time.
"Frankly, right now, it's more like the Wild West," he added.
The feedback is a far cry from what DeFi projects are supposed to be, or at least what the spirit of DeFi really is.
Proponents envision a fully decentralized multi-trillion dollar financial ecosystem where smart contracts handle payments, loans, exchanges, transactions, and other services, and there are no physical or identification barriers.
But with noble dreams come noble characters, so who is to blame if regulation finds its way to an idealized vision of the global financial system?