The SEC (Securities and Exchange Commission) has employed the blockchain analytics firm AnChain.AI to help it to regulate and monitor the DeFi (Decentralised Finance) industry.
Hot on the heels of Gary Gensler stating that he was keen to bring the cryptocurrency sector into line and to oblige the industry to report on all transactions, the SEC has gone ahead and signed a deal with AnChain.AI to help it to understand and regulate the world of decentralised finance.
According to a recent article on Forbes, the contract on the deal is for an initial $125,000, with options on successive years, each worth $125,000, up to a total of five years.
AnChain.AI is a San Jose-based company that specialises in artificial intelligence and machine learning. It has a focus on searching for and tracking illegal transactions across the likes of crypto exchanges, DeFi platforms, and even in the traditional finance sector.
The company’s CEO and co-founder Victor Fang stated:
“The SEC is very keen on understanding what is happening in the world of smart contract-based digital assets…so we are providing them with technology to analyze and trace smart contracts.”
The company is having quite some success, as along with the SEC deal, it has also just announced the start of a $10 million Series A funding round led by Susquehanna Group and SIG Asia Investments LLP among others.
Gensler, chairman of the SEC had warned earlier this month that the DeFi industry was not immune from regulation just because it was “decentralised”. In an interview with the Wall Street Journal, he added:
“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.”
DeFi platforms and their protocols are becoming hugely complex. According to the Forbes article, Uniswap alone processed upwards of $1.8 billion in transactions over the last 24 hours. Many of the tokens transacted could well be deemed to be securities.
Hester Pierce, commissioner for the SEC has encouraged DeFi platforms to be proactive with the SEC. She said in a Forbes interview back in March:
“When you start to look at the tokens themselves and try to figure out whether they’re securities, it does get kind of confusing. In particular, it’s so hard in the DeFi landscape because there’s such variety. 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.”