Burr & Forman

02.8.2019   |   Bitcoin, Blockchain & E-Transactions Law, Blog Articles, Cryptocurrency, SEC

The SEC Solicits Blockchain Analysis Service

The Securities and Exchange Commission issued a Sources Sought Notice on January 31, 2019, seeking a private vendor “to support the goal of acquiring data for the most widely used blockchain ledgers.”[1]

In the notice, the SEC did not specify or name the ledgers it wanted to acquire data from; however, the requirement that they gather data from the “most widely used” ledgers suggests that the SEC would want the vendor to be able to gather data from cryptocurrencies such as bitcoin and ethereum.

This step towards data gathering, likely in the realm of cryptocurrencies, is an interesting move for the SEC. In the U.S., cryptocurrencies like bitcoin are considered to generally be commodities, not securities. This means that the cryptocurrencies are overseen by the Commodity Futures Trading Commission, not the SEC.

In a second notice, issued the same day, the SEC sought a vendor who can provide “aggregated market data” for digital assets. [2] The request does not specify how deeply the agency would be monitoring markets for fraud. The second notice aims to provide the SEC with a vendor who can provide information that is more common to markets more familiar to the SEC, including equities. The information would, likely, include transaction data that allows for the SEC to “monitor risk, improve compliance, and inform commission policy with respect to digital assets.”

Since blockchain is a decentralized technology that allows for digital recording and distribution of transactions, no central authority governs or regulates the process. This, in turn, allows for bitcoin and other cryptocurrencies to have a high degree of anonymity. As banks, financial services firms, governments, and technology startups continue to explore blockchain and cryptocurrency, many expect regulators to continue to get involved.

[1]https://www.fbo.gov/index?s=opportunity&mode=form&id=c18a03f93cf06df47dab8a1c1a7f87a9&tab=core&_cview=0

[2]https://www.fbo.gov/index.php?s=opportunity&mode=form&id=66d60285a008fee408c4e97c0a9a7ce7&tab=core&_cview=0


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