United States Securities And Exchange Commission Solicits Blockchain Analytics Firms For Data Review

SEC

The Securities and Exchange Commission in the United States has always been skeptical about the cryptocurrency industry with good reason. This regulators started a full manhunt on initial coin offerings and cryptocurrency related businesses right after the 2017/2018 ICO frenzy. This is because the number of scam ICOs that deceived investors and made away with their hard earned cash. The SEC decided to step in to protect unsuspecting investors from losing their funds to scam projects.

One of the issues the SEC hammered on last year was cryptocurrencies that fell under the securities asset class. At one point, the chairman of the SEC defined what securities are stating that BTC and ETH, by nature, are not securities because they are decentralised. This led to a positive sentiment in the industry at the time. Still, the SEC started investigating many blockchain or cryptocurrency related businesses including the Ethereum-based platform EtherDelta. The point is that the SEC hasn’t been friends of the industry. If anything, the lack of regulatory clarity has stopped many investors from getting involved with cryptocurrencies.

SEC Solicits Blockchain Analytics Firms

It’s true that cryptocurrencies are the most common application of blockchain technology. However, they aren’t the only use cases. There are many other use cases of blockchain technology and one of the most significant is application of blockchain technology in data management. The SEC may not fancy cryptocurrency but it recently revealed that it is sourcing for blockchain analytics firms.

According to a statement released by the commission on the 31st of January, blockchain will soon be used to data analysis of companies. The commission is looking for blockchain-based companies that will provide data support to help minimize the risks attached to its compliance enforcement and monitoring activities. The company will also inform the SEC about digital assets. This isn’t a surprise as the SEC, in December, announced that the examination of cryptocurrencies is one of its top priorities for the year 2019.

In the statement, the SEC explained that it interested in sourcing for data in one of the most common blockchain ledgers. Apart from providing data, the companies will be required to parse the information to make the review process easy. The SEC also asked for information about the process of data extraction, conversion and verification. Participants were asked to outline their abilities to derive insights from available data. This includes the identification of cryptocurrency address owners.

The companies that are interested in participating are required to respond to the request from the agency by February 14. The response will be via email and it would contain a brief ability statement package.

In August 2018, one of the agents of the United States Drug Enforcement Administration, Lilita Infante, said that even if privacy-focused cryptocurrencies are more anonymous than the flagship cryptocurrency, Bitcoin, the agency has ways to track them. She said that the blockchain provides them with the right tools for identification.

Do you think the SECs request for more information about the use of blockchain technology is a good thing? Share your thoughts.

Ufuoma Ogono is a cryptocurrency writer with over 3 years experience in the cryptocurrency industry. She dedicates her time to sharing valuable information to members of the cryptocurrency community.

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