The US Securities and Exchange Commission (SEC) has partnered with a blockchain startup to help it uncover illegal activity in the decentralized finance (DeFi) ecosystem.
As reported by Forbes, AnChain.AI’s five-year deal with the SEC will see the company provide regulators with tools to analyze and track smart contract-powered transactions.
San Jose-based AnChain.AI is an artificial intelligence and blockchain firm that flags unwanted movements across crypto exchanges and DeFi platforms.
The startup’s predictive engine — which the SEC paid $625,000 to access — will supposedly allow the markets watchdog to “move beyond doing post-incident investigations” and into more preventative actions.
There’s currently around $135 billion locked into the top 100 DeFi protocols, according to CoinGecko.
Uniswap, the world’s top decentralized exchange, recently processed nearly $2 billion in transactions in a single day.
SEC chief warned DeFi
In March, SEC Commissioner Hester Peirce called for greater cooperation between regulators and DeFi entrepreneurs, saying:
“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,” advised Peirce.
And in August, the Wall Street Journal published an interview with SEC chairman Gary Gensler, who took a sterner tone.
“DeFi operations are not immune from oversight because they use the word ‘decentralized,'” warned Gensler (our emphasis).
“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.”
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