The last few weeks have seen regulators make various adjustments in a bid to cater to and find ways to properly regulate cryptocurrency. Regulator interest in crypto piqued after Facebook announced its project Libra
According to recently published documents, the American Securities and Exchange Commission (SEC) is planning to hire contractors to run nodes for specific cryptocurrencies on behalf of the agent. The plans mentioned in the document reveal that the contractors would be running nodes for Bitcoin Core (BTC), Ripple (XRP) and Ethereum (ETH). Through these contracts, the SEC seeks to improve its ability to monitor compliance risks in the crypto industry. This action by the SEC could have different implications for those who buy cryptocurrencies.
What does this move by the SEC mean for the industry?
The news that the SEC is seeking contractors to run full crypto network nodes can be interpreted in different ways by players in the online crypto trading industry. For starters, it could mean that the agency wants to find ways to regulate and accommodate the crypto industry properly and therefore, creating a fertile environment for the industry to grow. It could also mean that the SEC is stepping up efforts to shut down the crypto industry in the United States in line with calls made by some government officials.
There are many companies which have applied to launch Bitcoin exchange traded funds (ETF) but the SEC has not approved any of these applications. The regulator also has issues with Ripple’s XRP tokens with regards to whether the tokens are securities or not. The SEC has made it clear that they will not seek any legal action against any companies which do it violate its guidelines or demands.
The notice itself does not give any specific reason regarding why the SEC plans to outsource the running of crypto nodes. The notice states that the contracts are being issued to help the regulator in its effort to monitor risk, improve compliance and inform policy with respect to digital assets. This could also mean that the SEC is ready to develop its policies using informed opinions about cryptocurrency.
While the regulator is currently seeking contractors to run nodes for BTC, XRP and ETH, it is possible that they could be looking towards running other nodes for other cryptocurrencies in the future. Some of the tokens that could be included in the second phase of nodes are Stellar, Bitcoin Cash, Neo, EOS and Zcash.
The SEC says that the contracts offered to those running the nodes will be on a preliminary base period of one year with the possibility of a four year extension. Those who are interested in taking the contracts are invited to submit a price estimate, a complete data scheme and a sample data file for review.
The bottom line
The SECs increased involvement with cryptocurrencies could mean a variety of things. What can be taken from all this, with certainty, is that the regulator is on an active path towards creating policies that are aimed towards cryptocurrencies? Whether these policies will benefit the industry or not is yet to be seen.