With global governments beginning to increase their commitment to preventing, detecting and subsequently seizing criminal proceeds held in the form of cryptocurrencies and blockchain technology, it appears that the U.S. Department of Homeland Security are looking to follow suit. The governmental department recently published a pre-solicitation notice, with the view of obtaining information from relevant stakeholders regarding the investigatory process of blockchain forensics.
For those unaware, pre-solicitation notices issued by U.S. governmental agencies are a way for interested stakeholders to ask specific questions related to a potential proposal. In the case of the pre-solicitation issued on November 30th, titled ‘The Department of Homeland Security (DHS) Small Business Innovation Research (SBIR) FY19 PreSolicitation’, the notice is linked specifically to blockchain analysis.
Upon breaking the notice down, it appears that the Department of Homeland Security are interested in hearing future proposals that will assist in finding a solution for law enforcement agencies to perform forensic analysis on blockchain protocols. Moreover, the notice also makes reference to the creation of a blockchain application that has the capacity to analyze emerging cryptocurrencies.
Department of Homeland Security Makes Reference to Monero and Zcash.
Interestingly, the Department of Homeland Security state that although the “most well-known use case would likely be Bitcoin“, prior endeavors have already addressed blockchain forensics regarding the world’s leading cryptocurrency. On the contrary, the agency are more concerned with the cryptocurrency industry in its wider context. In fact, the pre-solicitation makes direct reference to privacy coins such as Monero and Zcash.
Read: What are Privacy Coins?
Moreover, it was also noted that ongoing research in to a range of factors linked to the phenomenon of blockchain technology must continue, notably consensus mechanisms, security, privacy, internet of things (IOT) and encryption.
Throughout the notice, the Department of Homeland Security are generally positive towards the digital eco-system, adding that “these technologies stand to radically transform operations in government and the private sector”. However, the agency also noted the importance of blockchain analytics with respect to the successful enforcement of anti-money laundering and KYC (Know Your Customer) compliance.
Furthermore, although the Department of Homeland Security recognize that certain characteristics of cryptocurrencies, such as the levels of privacy and anonymity they offer users, it is crucial that law enforcement agencies are able to have a greater oversight of transactions to ensure illicit activity is detected.
It is important to note that whilst the pre-solicitation notice is seeking technical questions related to the subject matter, it is not yet looking for specific proposals from industry experts at this moment in time. It is believed this will be the next stage for the Department of Homeland Security.
U.S. Governmental Departments Continue Their Exploration with Blockchain
The recent pre-solicitation notice issued by the Department of Homeland Security follows on from recent interest from the Defense Advanced Research Projects Agency (DARPA). The agency are the organization responsible for providing the Department of Defense with research material and as such, are looking to create a workshop that centers on permissionless blockchain usage.
However, unlike the pre-solicitation notice issued by the Department of Homeland Security, which is primarily concerned with law enforcement investigatory measures, researchers at DARPA are interested in permissionless distributed consensus protocols. Researchers believe that three main pillars in particular require further exploration. This includes the ability to incentivize without utilizing traditional money, security models for distributed protocols and further analysis of centralization within the distributed consensus arena.
The DARPA blockchain workshop has been scheduled for February 14-15th and is set to be hosted in Arlington County, Virginia.