The internal revenue authority (IRS) has announced blockchain intelligence firm, Chainalysis, as one of the two winners of its deal to create a tool for monitoring privacy coins like Monero and layer two protocols. On September 30, the tax authority granted two contracts worth $625,000 to both Chainalysis and Texas-based blockchain analytics firm Integra FEC.
The United States taxman initially revealed its hunt for an analytical tool for tracing privacy coins early in September. According to the proposal by the IRS, it would only accept the applying firms to submit functioning prototypes before September 16. According to reports, Chainalysis and Integra FEC emerged the winners out of 22 submissions.
Chainalysis cryptocurrency and blockchain analytics prowess
Chainalysis is one of the leading blockchain and crypto intelligence companies in the industry. Various government bodies and agencies regularly award the firm such contracts. On the other hand, Integra FEC is not as popular as their counterparts; however, it boasts million-dollar deals. For instance, the Securities and Exchanges Commission (SEC) has contracted the firm for some technical and scientific consultancy services.
The initial $625,000 contract will help the worthy winners to transform their prototype into a functional theory in the next eight months. From there, a pilot phase will commence, and once finalized and authorized; the government will grant the firms an additional $125,000.
According to the IRS, the goal of the initiative is to aid IRS Criminal Investigation to track crypto transactions with details such as time and dates of the transaction, amount involved and exact wallet address. The tax authority is hoping to utilize the analytical tool to anticipate the potential transactions of marked addresses.
Demand for privacy coins surging
With government bodies stepping up their interest in crypto transaction tracing, the number of firms specializing in cryptocurrency tracing will likely surge. Monero is one of the favourite digital currencies among criminal organizations due to its privacy features. According to the United States tax authority, Monero is being utilized by ransomware group Sodinokibi because of its security prowess.
As the demand for privacy coins surge among criminals, authorities are also stepping up their forensics aptitudes to tackle the issue.