Nodes for Bitcoin, Ethereum, and Other Platforms Will Be Run by the SEC

  • The SEC is hiring a contractor for a new project involving several blockchains, including Ethereum and Bitcoin.
  • The contractor will need to evaluate information on the blockchain and update their information daily.

The United States Securities and Exchange Commission (SEC) has been approached many times to approve various efforts in the cryptocurrency industry, like a crypto-based ETF.

However, the crypto industry has gotten nowhere, and the regulations surrounding it have been in a continual process of change. Now, it looks like the SEC is finally willing to get its feet wet.

According to reports from TrustNodes, this authority has decided to run contractors through nodes on the Bitcoin and Ethereum blockchains. However, it isn’t stopping there. The SEC has stated that they will also be running nodes in

“as many as possible of the following blockchains: Bitcoin Cash, Stellar, Zcash, EOS, NEO, and XRP Ledger.”

There’s no reason provided by the SEC regarding why it is running its own node. The only possible explanation is that the SEC is trying to

“support its efforts to monitor risk, improve compliance, and inform Commission policy with respect to digital assets.”

The SEC also stated that their work will source the blockchain information from the

“hosted nodes, rather than providing this data as a secondary source.”

TrustNodes suggests that the SEC is most likely seeking out an analytics company that could outsource the blockchain monitoring of the SEC, as well as helping with their compliance investigations.

The SEC is allegedly seeking out data that includes “hashing algorithms, hashing power, mining difficulty and rewards, transactions quantity and size, coin supply and blockchain size,” which could typically be offered for free. However, based on their needs, it is likely that the SEC will want an analysis, rather than just the data.

In their requirements, the SEC states that they need a contractor that can:

“demonstrate level of rigor of data cleansing and normalization meets requirements of financial statement audit testing.”

The new contract will be responsible for gathering all of the data from the genesis block until now, and this information should be updated on a daily basis.

The provider will need to adhere to the requests to add new blockchains within three months of being notified, which suggests that the SEC wants to establish on-chain surveillance systems. However, no clarity is offered on why Bitcoin is included.

Since Bitcoin is a decentralized and permission-less open network, the ability to run a node and access the data is available to anyone. The SEC cannot control Bitcoin, so the most they can do is see the actions on the blockchain. However, the information can lead to other impacts.

For instance, Ethereum raised capital on this blockchain before it launched. While the SEC has explained that Ethereum isn’t considered security, they’ve yet to explain if XRP falls in the same category. Perhaps the reason that this system is being set up so intricately is to see if a token or project would be considered a security, though it is curious why such an endeavor has not previously been researched.

TrustNodes suggests that the SEC could be working on a framework that is more lenient by creating a policy that is based on the specific qualities of the blockchain. For compliant tokens, this could mean approval by the SEC.

While the regulator may finally be moving its feet on the crypto industry, the use of blockchain could either lead to stronger enforcement or facilitating capital formation.

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