Zcash and Monero are particularly talked about.
On November 30, the US Division of Homeland Safety’s (DHS) Small Enterprise Innovation Analysis (SBIR) Program issued a pre-solicitation document that focuses on, amongst different topics, the forensic evaluation of transactions utilizing digital foreign money.
The SBIR program was launched by the DHS in 2004 in an effort to entice modern and artistic US-based small companies to take part in federal analysis and improvement applications, and to create safety options for the DHS.
Like a number of different authorities companies, together with the Division of the Treasury, the DHS is anxious about cryptocurrency getting used for unlawful acts equivalent to cash laundering, financing terrorist organizations, or drug trafficking.
This concern was seen within the US Home of Representatives, when in September of final 12 months, it passed the “Homeland Safety Evaluation of Terrorists Use of Digital Currencies Act.” This act, if made legislation (it is at the moment idling within the Senate), would problem the Underneath Secretary of Homeland Safety for Intelligence and Evaluation to develop and distribute a menace evaluation relating to the usage of cryptocurrency by terror organizations.
Talking to ETHNews on the time, a DHS official defined the significance of the act:
“Anytime we will deny terrorists of funding avenues is nice. Additionally, this invoice goes a protracted technique to recognizing cryptocurrencies are right here to remain and can develop into extra ingrained within the material of our lives. The downside is the lack of information about cryptocurrencies inside DHS.”
Maybe in an effort to show its case, in December of final 12 months, the DHS brought the written testimony of chief particular agent Matthew Allen earlier than a Senate Committee on the Judiciary listening to titled “S.1241: Modernizing AML Legal guidelines to Fight Cash Laundering and Terrorist Financing.”
Throughout this listening to, Allen gave particular examples of cryptocurrency getting used for drug trafficking and talked about that additionally it is being utilized by transnational crime organizations (TCOs) to launder cash and as a technique to conduct nameless transactions.
Apparently, Allen particularly talked about that in his examples the events selected Bitcoin over cryptocurrency designed to anonymize transacting events – and that Bitcoin’s public ledger in all probability helped within the seize of those malicious actors.
About these privateness enhanced tokens, Allen said:
“HSI brokers are more and more encountering digital foreign money, together with newer, anonymity-enhancing cryptocurrencies (AECs), in the middle of their investigations. AECs are designed to raised obfuscate transaction info and are more and more most popular by TCOs.”
The brand new pre-solicitation doc – which differs from a Request for Proposal in that the DHS is asking for events to contact the authors with useful feedback or technical questions as a substitute of requesting particular options to the problems within the doc – revisits these issues.
Though the doc mentions the work performed in “bitcoin analytics” it does admit that Bitcoin solely covers a small part of the cryptosphere. The principle focus of the doc is on how you can forensically analyze the blockchain used for transactions by which AECs equivalent to Zcash or Monero are used.
The doc states that whereas the anonymity digital foreign money can present is one in all its promoting factors, this anonymity can be what entices companies such because the DHS to discover ways to monitor, hint, and perceive unlawful actions perpetrated utilizing blockchain know-how.
The doc states:
“To that finish, this proposal requires options that allow legislation enforcement investigations to carry out forensic evaluation on blockchain transactions … Moreover, with the proliferation of latest blockchain variants, the specified resolution ought to both try to indicate generality or extensibility, or no less than present working approaches to treating newer blockchain implementations.”
The DHS outlines three phases it wish to see future proposals adhere to.
Part one consists of the design of a “blockchain evaluation ecosystem” that can permit for the forensic evaluation of the purposes of digital foreign money, particularly, Zcash and Monero.
Throughout section two, the DHS is requiring an illustration of a prototype of the ecosystem designed in section one. The demonstrations ought to exemplify makes use of circumstances for the proposed system, how the proposed system can analyze suspicious transactions with and with out exterior knowledge, and the way the system can be utilized on varied blockchain platforms. On this section, a technical report outlining outcomes and wanted enhancements can be required.
In section three, the DHS needs to see how the proposed ecosystem can be utilized in each the governmental and business sectors.
Different US governmental entities are additionally considering stopping criminals from utilizing digital foreign money for unlawful functions. In June of this 12 months, ETHNews reported that the beneath secretary of the US Treasury’s Workplace of Terrorism and Monetary Intelligence, Sigal Mandelker, talked in regards to the want for tighter crypto laws. On November 28, Mandelker’s workplace listed the bitcoin addresses of two Iranian nationals suspected of exchanging cash from a ransomware assault.
The Division of Homeland Safety has but to reply to requests for remark.
Nathan Graham is a full-time workers author for ETHNews. He lives in Sparks, Nevada, along with his spouse, Beth, and canine, Kyia. Nathan has a ardour for brand spanking new know-how, grant writing, and quick tales. He spends his time rafting the American River, enjoying video video games, and writing.
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