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The US Securities and Exchange Commission (SEC) has taken a major step towards regulating the Defi market, just days after SEC chair Gary Gensler said the decentralized finance markets are something they are looking into. SEC has on-boarded blockchain analytic firm AnChain.AI to help the regulatory body regulated the Defi market.

The firm revealed that the SEC has signed a 5-year contract at $125K/year totaling a $625K deal. During a recent interview, Gensler has said,

“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.”

Victor Fang, CEO, and co-founder of AnChain said,

“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.”

AnChain is a reputed blockchain analytic firm that tracks illicit crypto transactions across exchanges and Defi protocols. The SEC contract started in May.

Will SEC Go After Defi Projects?

The recent statements from the SEC chief about Defi along with the amendments in the Infrastructure bill requires custodians to offer details about all Proof-Of-stake token holders (which is considered near impossible, given the anonymity factor in def), it seems SEC is gearing up for tough measures around the defi market.

Defi gained popularity over the past couple of years, turning into a multi-billion dollar industry. Currently, Defi projects account for $82 billion in assets with the lead decentralized exchange Uniswap processing over a billion dollars in daily transactions. Defining laws around the market is going to be a complex task, but high regulatory scrutiny could also lead to the closure of businesses. SEC’s tough regulatory measures shouldn’t come at a cost of innovation.

Source: Coingape.com

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