One of the main benefits of trading in cryptocurrencies is to remain anonymous during financial trading. However, the privacy offered by cryptocurrencies is now challenged by US authorities as they seek advanced ways to track even the privacy-focused cryptocurrencies like Zcash and Monero.
A recent pre-solicitation document published on 20th November by the Small Business Innovation Research Program that runs under the Department of Homeland Security revealed that US agencies are looking for advanced ways to track transactions based on cryptocurrencies, including Zcash and Monero.
According to the document, the goal of US authorities is to track down potential illegal activities that are taking advantage of privacy features offered by both Monero and Zcash. DHS has already invited some of the top blockchain based or linked startups that can help the authorities in conducting forensic analysis in the future on transactions in these privacy-focused cryptocurrencies.
However, the DHS (Department of Home Security) also claimed that the privacy offered by the cryptocurrency is desirable and acknowledges the benefits offered by blockchain technology. The only reason they want to track transactions on these cryptocurrencies is not to hamper the trading but to discourage the use of Monero and Zcash for unlawful practices like money laundering.
DHS is looking forward to developing a system that can help them in forensic analysis on blockchain network. For this purpose, they asked several leading blockchain-based startups to submit their inputs and suggestions by December 18th.
The proposal by DHS is known as “Blockchain Applications for Homeland Security Forencis”, with a goal to make it easier for law enforcement agencies to track all transactions made on the blockchain, even if they are made using privacy-focused cryptocurrencies.
The interest by DHS in forensic analysis of fraudulent blockchain transactions also reflects that the influence of blockchain technology has also attracted criminal elements, finding privacy-focused crypto trading as an easier way to transfer wealth without using formal financial channels. There is a rising concern among several governments that cryptocurrencies are now widely used by money launderers, as traditional financial channels are making it harder to launder money.
The new initiative by DHS is to counter such illegal activities on the blockchain networks. However, the idea is just proposed, and we still have to wait for months for its implementation.