Hey all, Liam here!

Massive staff cuts at government agencies this spring have people scrambling to figure out how to regulate a booming crypto industry. 

Some suggested the use of artificial intelligence, as well as analytics products from companies like TRM Labs and Chainalysis. 

Legion, a new token launching platform, has another idea – and they’re hoping the Securities and Exchange Commission is keen on trying it out. 

As part of a 12-month pilot programme called Pathfinder, Legion’s co-founder, Matthew O’Connor, is pitching an automated disclosure system that converts raw blockchain data into compliance reports for upcoming crypto projects. 

O’Connor shared an exclusive look at how the programme would work. 

For instance, consider the “Post-TGE Automated Disclosure System,” a tool designed to monitor events that occur after a token generation event. This tool will detect token sales by team members, unauthorised minting of additional tokens, as well as changes to a project's governance structure made without proper authorisation.

If triggered, users who had participated in the TGE would be immediately notified via email and public dashboards. Additionally, depending on the project’s integrations, API endpoints would also be notified.

It’s a breath of fresh air for those in the crypto industry. New token projects have exhibited some of the most scandalous behaviour over the years, leaving many investors high and dry.

And O’Connor says he’s hoping it will even inform how upcoming market structure bills are devised. 

Pilot programmes, sandboxes, and experimental environments can make writing complex laws for the industry, such as Europe’s sweeping Markets in Crypto-Assets framework, much easier. 

“MiCA is a good example of a regulation that gets some things right, but other things dont work perfectly in practice,” he told DL News. “There was little to no trials ahead of time that would have detected that and made it easier to adapt.”

Stepping back, though, the Legion co-founder also hopes that this sandbox may even inform how upcoming market structure bills could be worded. 

Pathfinder, after all, would be a safe space for crypto companies to experiment and explore each of these tools. 

It would also provide the SEC with an inside look at a live environment, allowing them to understand how these initial coin offerings work. 

So far, the agency’s response to the idea has been positive, O’Connor told DL News. 

“There have been ositive responses as indicated by continuing conversations with members of the task force, but these things take time of course,” he said.

ICYMI

• Tether to launch USAT stablecoin for US market with former White House crypto lead Bo Hines

  Out of the White House and into a key new role for the industry’s largest stablecoin. Bo Hines has been tapped to bring Tether to the US.

• Binance and Franklin Templeton blur the line between crypto and Wall Street
  While lawmakers hammer out the details for upcoming market structure rules, which would further integrate the crypto industry into traditional financial markets, unexpected partnerships are already emerging.

• SEC chair says ‘crypto’s time has come’ as US pivots to support industry
  SEC Chair Paul Atkins issued the most full-throated support of crypto during an an international gathering of the world’s top economists. That message? “Crypto’s time has come.”

Story of the Week

Banking lobbies eye revisions to stablecoin rules as Congress returns

While lawmakers continue to make concessions, trades, and fine-tune key wording for upcoming market structure legislation, the banking community is looking in a much different direction.

A slew of the larger banking lobbying groups are seeking key changes to language in the Genius Act, which they suggest threatens their business model.

Post of the Week

Speaking of disclosures, perhaps contacting investors whenever a company changes its board members, divests assets, or engages in any other corporate activity won’t be so important in the long run.

US President Donald Trump issued a statement on the social media site Truth Social on Monday, saying that quarterly reports are “not good” and that companies should consider bi-annual reports instead.

DL News is an independent news organisation that provides original, in-depth reporting on the largely misunderstood world of cryptocurrency and decentralised finance. From original stories to investigations, our journalism is accurate, honest and responsible.

Forwarded by a friend? subscribe here.