No more privacy: How Google and the US Securities and Exchange Commission scrutinize SEC Blockchains

With the announcement of Bitcoin in the public was also the narrative of the supposedly anonymous Darknet currency. Although it has meanwhile spread that Bitcoin is not anonymous, but pseudonym, the image remains struck. The US Securities and Exchange Commission and the Internet giant Google now want to use analytical software to better understand the blockchains of Bitcoin & Co. About their motivation and the implications for the crypto sector.

For understandable reasons, authorities are a thorn in the side if they do not have comprehensive information on the transactions taking place in the crypto area. But not only government agencies, but also Internet corporations like Google have an interest in learning as much as possible. If Google knows each of our steps on the Internet, why not do every transaction on the blockchain we make? The successful gathering of information and data as well as their evaluation determines success and defeat in the 21st century – this applies to both states and companies.

Data is King
While government agencies such as the US Securities and Exchange Commission are primarily concerned with security and control, platform economy companies focus on the economic aspect. If Google knows me well as an internet user, I can be particularly personalized ads. The more Google knows, the better the advertising algorithm works and the more revenue the search engine provider makes. Assuming Google also knew which traces we leave behind on a blockchain and which services we pay with cryptocurrencies, then this would also be an economically important piece of information, among other things, to profitably evaluate our consumption behavior.

In short: an absolute contradiction to the actual Blockchain narrative. Finally, blockchain technology has begun to undermine the centralized rule of the data octopus and to re-decentralize the users’ data.

SEC: Soon Innovation Hub for Blockchain Monitoring Tools?
For example, the US Securities and Exchange Commission (SEC) intends to monitor transactions of the most widely used crypto-ledgers more rigorously. For this purpose, a program will be developed, which reads out the data from the blockchain and facilitates the evaluation. Therefore, the SEC has launched a call: companies from the blockchain industry can still apply until 14 February 2019 with an appropriate monitoring tool.
The aim of the surveillance is to “monitor risks, ensure compliance with existing regulations and derive recommendations for action on the handling of digital assets.” An objective that is sure to be shared by all regulators around the world.

Not only for tax evaders and criminals the air is getting thinner, but also for those who care about privacy. However, it remains to be doubted that criminals still transfer large sums via Bitcoin. Here privacy crypto currencies such as Monero should be in greater demand. This is exactly where the limited success of any surveillance measures is shown. If Bitcoin transactions can be better evaluated and traced, they will move to other, more anonymous cryptocurrencies. So the problem would not be solved.

Positive signal for Bitcoin ETF
As authorities gain more information about what is happening at the blockchain, they are also more likely to be willing to accept applications for crypto-financial products. One of the main reasons for the rejection of the Bitcoin ETFs was the high degree of manipulation in the crypto market. While surveillance tools do not per se solve the problem of stock market manipulation or the lack of fully regulated crypto exchanges, they help to better understand the crypto market and identify players.

Although many crypto enthusiasts are not fans of government surveillance, advocates of a regulated crypto-financial market adaptation are positive about these initiatives.

With Google’s Blockchain ETL crypto-bots on the track
To better uncover cryptographic manipulation, Google data analyst Allen Day has developed a tool called Blockchain ETL. Using this tool, he had become aware of “autonomous agents” – notably bots – who are pushing individual units of cryptocurrencies among themselves. The obvious assumption that can be taken from the report: The agents manipulate (for example “on behalf” of crypto exchanges) the prices of the individual crypto currencies.

An certainly exciting and useful application. Nevertheless, there remains a bitter aftertaste when blockchain analysis tools come just from Google.