In brief
- The SEC is seeking blockchain forensic tools capable of analyzing smart contracts.
- The Commission previously awarded a contract to CipherTrace for its crypto tracing capabilities.
- The SEC appears poised to monitor the crypto industry even more closely.
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The US Securities and Exchange Commission is on the lookout for a tool that can analyze blockchain smart contracts.
As first reported by Bloomberg Law, the SEC published a notice on July 30 requesting that companies solicit it with applications for a tool that can “analyze and detail code within blockchains and other distributed ledgers.”
The tool, it wrote, would support the SEC’s efforts “monitor risk, improve compliance, and inform Commission policy with regard to digital assets.”
Specifically, the software would help the SEC work out how token sales funds are distributed. The SEC has chased after several cryptocurrency companies for running ICOs, among them Block.One, Telegram and Kik.
It wrote that “token or coin sale specifications” and “purchase and/or sale restrictions” are necessary features of the tools.
This would be crucial to the SEC’s efforts of working out whether crypto companies have violated US securities laws; it hounded many ICOs after it claimed that the companies responsible distributed tokens to US investors without first registering with the regulator.
Companies —or “small businesses,” per the notice—have until August 14 to offer their services.
On July 29, the day prior to the notice’s publication, the SEC put out a notice saying that it intended to award blockchain analytics firm CipherTrace a contract to help it track the flow of funds on blockchains.
In its notice, it said that CipherTrace’s products are “the only known blockchain forensics and risk intelligence tool that can support the Binance coin (BNB) and all tokens on the Binance network.”
The SEC said that the government would “give consideration to interested parties” if they put their submissions in by “the response date of the notice,” which was...a day later, July 30.
The SEC did not provide any indication that the two notices are related. However, the products required—software that would help the SEC track the flow of cryptocurrencies—are similar, apart from the other notice’s clarification about BNB. (CipherTrace, however, also supports hundreds of other assets).
But one thing is clear: the SEC is arming up.