US Homeland Security Shows Interest In Blockchain Transactions

The US Department of Homeland Security has published a pre-solicitation document for the 2019 fiscal year. This has been done through the agency’s secretary Kirstjen Nielsen. There are several issues that have been explained in that 27-page letter document. But the main one is dedicating resources that can be used to analyze the privacy of virtual coins.

Blockchain Forensic Tools Needed By Law Enforcement Agencies For The Privacy Coins

The Department of Homeland Security has submitted a proposal for the SBIR program – The Small Business Innovation program. This would also include its platform for Science and Technology. There are so many subjects that have been covered in the document. Key among them are cybersecurity, blockchain technology, sensors, Internet of Things, and communications. However, the Department of Homeland Security has not included the Distributed Ledger Technology in that list. It stated that it would be leveraged for government and commercial applications in the future. A number of these blockchains enable unfavorable techniques of transaction obfuscation and anonymity.

Targeting The Newer Coins

According to the document, the new proposal tends to target the relatively new virtual coins. It seeks blockchain forensic analytics applications for coins like Monero and Zcash. The continuing research in the field has also contributed to new technological techniques and implementations. These are what would multiply the kinds of proof of mechanisms, security, privacy, and consensus.

Introducing New Phases For Tackling The Anonymity Of The Virtual Coins

DHS has also observed that there is an interest for some organizations and persons to use these funds for illegal actions. This is despite the fact that the proposed privacy features are very desirable and effective in nature. These illicit acts are the main reason why the DHS is introducing forensic analysis into blockchain transactions. However, the targeted coins are the ones that exercise the tactics of anonymity. There are three phases that the agency plans to use in mitigating these main issues. The first phase is for programmers and researchers to create an ecosystem for blockchain analysis used by law enforcement bodies. They can also opt to modify the current DLT analysis system. The new system must also be able to offer surveillance architecture. This is what would be used for privacy currencies like Zcash and Monero.

The Other Phase

The next phase is to come up with a blockchain monitoring prototype. It would incorporate suspicious transactions analysis without and with the external data. The last phase would include the rollout of government-grade and commercial blockchain surveillance systems. This new implementation would not only help security operations and law enforcement bodies. It would also be of benefit to the private financial institutions. They would use this to enforce the anti-money laundering compliance and know your customer.

For some time, the DHS has been investigating the activities of the virtual coins and blockchain. It is not the first time the body is looking for ways of barring anonymous crypto operations. A task force was formed by DHS in April 2016 for identifying unlicensed BTC exchangers.