The SEC wants Bitcoin and Ethereum nodes
Regulation

The SEC wants Bitcoin and Ethereum nodes

By Marco Cavicchioli - 31 Jul 2019

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The US Securities and Exchanges Commission (SEC) is planning to launch some Bitcoin nodes, an Ethereum one, and “as many as possible of the following blockchains: Bitcoin Cash, Stellar, Zcash, EOS, NEO, and XRP Ledger”.

This was stated in an official note complementing a proposal dated June 26th, which aimed to provide the SEC with a source of data supply, a so-called Commercially Available Off-The-Shelf (COTS), with regard to the main blockchains, in order to monitor any risks involved, regulatory compliance and inform policy commissions about digital assets.

The management of nodes will not be carried out directly by the SEC but will be entrusted to an external supplier who will have the task of executing a node for each supported blockchain. 

COTS will also have to support the possible addition of new blockchains in the future, will have to provide the SEC with all blockchain data in a direct and disintermediate way from the very beginning (i.e. from the genesis block) and will also have to include all the cryptocurrencies connected to the selected blockchains. 

The data that will be provided to the SEC will include the cryptocurrency symbol, sending and receiving addresses, unspent balances, transaction hashes and timestamps, transaction amounts, transaction commission costs, confirmations, block hashes and block heights.

In addition, they should also cover hashing algorithms, hashpower, mining difficulty, rewards, quantity and size of transactions, circulating supply and blockchain size.

The reasons, official or unofficial, that prompted the SEC to make this decision are not known with precision, but it is likely that they have to do with direct and disintermediate access to blockchain data, since today these data are acquired through secondary sources such as explorers. 

There is one passage of the note, which refers to the requirements of the supplier, that could help in understanding the meaning of it:

“Demonstrate level of rigor of data cleansing and normalization meets requirements of financial statement audit testing”.

The hypothesis that is circulating is that the SEC is trying to implement surveillance systems on these blockchains so as to control what happens on them. 

Moreover, being open and decentralised networks, anyone can make a node, including the authorities. 

Another hypothesis is that the SEC wants to investigate security tokens, both those that are openly considered as such and those that are actually security tokens even though they have not been presented to the market as being so. 

In fact, the specific task of the agency is to ensure that US securities laws, including market trading, are respected, so this may be the purpose of this initiative. 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 11 thousand subscribers.

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