The U.S. Securities and Exchange Commission (SEC) is acquiring a monitoring and surveillance tool to detect vulnerabilities within the burgeoning DeFi ecosystems and smart contracts.
Decentralized finance platforms, also known as DeFi and smart contracts (smart contracts) are causing a stir at all levels. It is a new industry that is experiencing an incredible boom, currently exceeding more than 4,46 billion dollars in digital assets locked within these platforms.
In just one day, the DeFi protocol Synthetix achieved a growth of 21,2%, going from a capitalization of 496 million to more than 652 million dollars, according to data from DeFiPulse. Likewise, the main industry protocols, MakerDAO, Compound y Aave They show daily growth of 3%, 0,5% and 0,4% respectively. Meanwhile, a user recently made more than $16 in profits by executing a DeFi transaction, which took just 13,2 seconds. As we can see, this is a growing and flourishing industry, which due to its constant evolution and development has begun to attract the attention of regulators, who are focusing on knowing in detail how it works and what are the possible risks involved.
Through a new analysis tool, the SEC also seeks to establish the organization's policies regarding the use of cryptocurrencies, and digital assets, while increasing its power of control over projects based on blockchain and decentralized distributed technology (DLT).
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A tool to analyze the DeFi industry and smart contracts
In a release Recently, the SEC revealed its intention to acquire an analysis tool that will allow it to have the capacity to analyze smart contracts in search of vulnerabilities and possible risks for users. The regulatory body is inviting all software development companies that wish to submit proposals and collaborate with the agency for the development of the tool, which should allow the SEC to know and identify a series of characteristics within the different smart contracts that are written. For example, through the analysis tool, the SEC should have the capacity to know the tokens used within the different contracts, know what the purpose of the contract is, the restrictions established within it, the addresses involved and the modifications to the contract, if any are made.
“The U.S. Securities and Exchange Commission (SEC), …, intends to acquire a distributed ledger technology (DLT) smart contract analysis tool to analyze and detail the code within blockchains and other distributed ledgers, in support of its efforts to monitor risk, improve compliance, and inform the Commission’s policy with respect to digital assets.”
Companies interested in participating in this call have until August 13 to submit their proposals and projects. For its part, with this statement the SEC reveals its interest in decentralized finance and smart contracts that are signed within this blockchain-based industry. The regulatory body considers that the comparative analysis of the different contracts can mean a strategic advantage for the sector.
Learn with Bit2Me Academy: What are smart contracts and how do they work?
SEC awards contract to blockchain monitoring and analytics company
A few hours before announcing the need for an analysis tool for smart contracts, the SEC also announced who awarded a contract to CipherTrace Inc., a blockchain forensics and research company based in California, United States.
Through this contract, CipherTrace will provide the SEC with another analysis tool that will allow it to understand and analyze the risks associated with operations carried out with digital currencies, especially the Binance digital currency (BNB) and all the tokens associated with this and other networks. According to the SEC, CipherTrace is the only blockchain forensics company that has the necessary tools to carry out work like this.
DeFi platforms begin to reduce “regulatory risks” through decentralization
In mid-July, the SEC announced a series of fines against Open, an American cryptocurrency investment company that allows tokenized stocks to be traded against fiat currency. In its announcement, the SEC claimed that the project was breaking the law and that the tokenized version of the stock was not backed by actual stock.
Because of these measures, the executives of the Synthetix and Aave platforms are beginning to take measures that help them minimize regulatory risks from the SEC and other agencies. Aave CEO, Stani Kulechev, claims that the decentralization of its protocols is a necessary measure to keep regulators out of the loop, as it will allow users to have greater control over the operation of the platforms and, in this way, not need to depend on any centralized organization that is subject to controls and regulations.
Similarly, Synthetix announced that it will now be integrated into a set of 3 Decentralized Autonomous Organizations (DAO), and that the Synthetix Foundation will no longer be operational. A measure taken by the project managers in order to ensure maximum decentralization of the protocol and avoid possible regulations.
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