The US Securities and Exchange Commission (SEC) recently announced almost doubling its specialized staff trained to keep an eye on crypto. SEC’s Crypto Assets and Cyber Unit is tasked with protecting crypto investors against fraudulent offerings, exchanges, lending platforms, decentralized finance (DeFi) platforms, NFTs, and stablecoins.
While the industry is wary of increased oversight, I am inclined to side with the regulators when they say the move is in the interest of investors.
Crypto investigations company Chainalysis’ upcoming State of Web3 report found NFT collectors have sent over $37 billion to NFT marketplaces in 2022 as of May 1, 2002, and are sure to beat 2021’s $40 billion total.
Furthermore, in Q1 2022, 950,000 unique addresses bought or sold an NFT, up from 627,000 in Q4 2021. Web traffic from the Middle East already accounts for around 5% of total global traffic to NFT marketplaces.
On a broader perspective, the company recently shared that it monitors $1 trillion worth of crypto transactions every month. According to DefiLama, as of May 18, 2022, there is over $100 billion in total value locked (TVL) across a number of DeFi protocols, which only dropped below the $200 billion mark thanks to the recent market downturn.
While these numbers wouldn’t surprise any crypto enthusiast, what is surprising is the estimate from the US investigative agency, the Federal Bureau of Investigation (FBI), which believes Americans alone lost nearly $1 billion worth of cryptos to scamsters in 2021.
Some of the widely reported crypto attacks have been perpetrated against some of the biggest crypto platforms, this year. For instance, February 2022 saw attackers target Wormhole, one of the biggest cryptocurrency platforms that offers bridges to Solana and other blockchains, making away with cryptos worth about $320 million.
The SEC argues that the momentous growth in the crypto markets in recent years has attracted a flurry of investors, not all of whom are well-versed with the workings of the DeFi economy, especially when it comes to safety. It asserted that the combination of a ballooning economy and not-well-educated retail investors has put the DeFi economy in the crosshairs of attackers.
The SEC, as well as other agencies around the world, have taken up the mantle to strengthen cybersecurity requirements for the DeFi economy. Sure, the increased, and stricter compliance mechanisms would cause discomfort to the crypto platforms, But I am all for them if they deliver on their promise and safeguard retail investors from losing their investments to fraudsters.
