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US Law Enforcement Wants Blockchain Surveillance Tools for Privacy Coins


The DHS has submitted a proposal for its Small Business Innovation Research program, which also incorporates its Science and Technology platform. The document covers subjects like cybersecurity, communications, the Internet of Things (IoT), sensors, and blockchain technology. The DHS agency explains that Distributed Ledger Technology (DLT) will likely be leveraged for commercial and government applications in the future, but some of these blockchains allow for unfavorable methods of anonymity and transaction obfuscation.

"This proposal seeks applications of blockchain forensic analytics for newer cryptocurrencies, such as Zcash and Monero," the solicitation letter reads.

The DHS document continues:   

Ongoing research within the field also contributes to new technological implementations and techniques that continue to multiply the specific types of consensus, privacy, security, and proof mechanisms.

Tackling Cryptocurrency Anonymity in Three Phases

The agency further details that while privacy features are desirable, there is an interest for some individuals and organizations to use these funds for actions of an "illegal nature." These illicit acts bolster the need for forensic analysis on blockchain transactions that exercise anonymity tactics. The DHS proposal explains that the agency wants to mitigate these issues by following three phases. The first phase is for researchers and programmers to design a blockchain analysis ecosystem for law enforcement agencies, or to modify an existing DLT analysis tool for this purpose. The new tool must be able to provide surveillance architecture specifically for privacy currencies such as monero and zcash.