The United States Internal Revenue Service (IRS) has launched an investigative pilot program that seeks to find tools to track various types of cryptocurrency transactions. These include software for analyzing private coins and second-level protocols such as the Lightning Network, reports The Block.
The tools will be used by investigators, who need to unravel the movements of privacy-oriented cryptocurrency users.
“This RFI is associated with a pilot IRS Criminal Investigation Division (CI) program. CI Cyber Crimes is requesting information about systems that will allow developers and testers to conduct investigative research of distributed ledger transactions involving privacy cryptocurrency coins (e.g., Monero (XMR), Zcash (ZEC), Dash (DASH), Grin (GRIN), Komodo (KMD), Verge (XVG), and Horizon (ZEN)); Layer 2 off-chain protocol networks (e.g., Lightning Network (LN), Raiden Network, Celer Network); Side-chains (e.g., Plasma and OmiseGo); and tracing challenges following the integration of the Schnorr Signature algorithm.” comments the IRS
“Acquiring applications to allow an investigation to more easily trace privacy coins and other protocols that provide anonymity to illicit actors would allow investigations to be more effective, as well as facilitate a higher level of deterrence by making it harder to conceal criminal activity. It also provides an investigative efficiency that is currently limited,” the RFI document explains.
In addition, the IRS made it clear that they plan to solve the difficulties with tracking bitcoin transactions that may arise after the integration of Schnorr signatures.
Earlier it was reported that the IRS and the United States Drug Enforcement Administration (DEA) are interested in purchasing blockchain analytics software developed by Coinbase.