SEC will Use Blockchain Companies to Support Its Risk Monitoring

US financial regulators work on mechanisms to make the market more “transparent” by identifying wallet owners

The U.S. Securities and Exchange Commission (SEC) issued a statement on January 31^st, in which it explains it is looking for companies which are able to provide data about blockchain technology to strengthen its risk monitoring service, and inform the commission about new digital assets.

The statement issued is related to the publication made last month, in which SEC ensured cryptocurrencies are one of its main priorities of study for the current year. In this way, the institution explained it plans to examine the activities of companies operating in the digital asset market, monitoring the sale, trade, and management of cryptocurrency assets, especially the behavior of those that are considered a “value”.

The statement explains that SEC is “issuing this notice of requested sources as a means to conduct market studies to determine the availability and technical capacity of large and small companies, in order to provide blockchain data to support the efforts of SEC, regarding risk monitoring, With this plan, it would be able to improve compliance and inform the Commission’s policy about new digital assets”.

According to the statement, the agency expressed interest in possible sources of information related to the accounting books of the most popular block of chains. The objective is always to benefit SEC’s database and find new mechanisms to prevent capital loss risks.

Specifically, SEC requests information to have an overview of the data extraction, conversion, and verification processes. In addition, the agency requests participating companies to describe their “ability to obtain information on available data”. It includes identifying the owners of the cryptocurrency addresses. Even, the institution seeks these companies to analyze this type of data and facilitate the review process.

It should be noted that, in August 2018, an agent of the US Drug Enforcement Administration (DEA) highlighted that, even though privacy-focused cryptoactives are more anonymous than Bitcoin, the agency has ways to track them and this must be done for safety.

Lilita Infante, one of the SEC’s agents, said blockchain actually “offers many tools to identify people. In fact, I want them to continue using cryptocurrencies”, she said.

A few days ago, SEC announced that cryptocurrencies would be among its main concerns during 2019. For this reason, the initiative about using blockchain technology to improve its internal processes is part of the plan to achieve that objective.

Last year, Scott Kupor, managing partner of private venture capital firm Andreessen Horowitz, commented that digital currencies are not a risk to security forces. “Bitcoin is the best friend of the Police”. This is due to its ability to track illicit transactions in the block of chains. This is one of the strengths of this technology, which could be exploited by The U.S. Securities and Exchange Commission in the near future.

Companies interested in SEC’s request should send their response through email until Thursday, February 14^th, with a brief statement of their capabilities. Once this step is ready, SEC will decide which blockchain companies are going to work with this government agency.

By María Rodríguez