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The U.S. tax agency has published a request for information regarding cryptocurrencies and privacy-focused technologies that obfuscate crypto transactions. The IRS-CI Cyber Crimes Unit request also requests information regarding “offchain layer two protocol networks, sidechains and Schnorr’s signature algorithm”.
A recently published IRS-CI Cyber Crimes Unit request that is available for public viewing requests information from “industry partners” regarding cryptographic assets that exploit privacy techniques and other types of protocols that hide transaction data . The Request for Information (RFI) was published on 30 June 2020 and the RFI is nicknamed “Pilot IRS Cryptocurrency Tracing”.
The IRS-CI request states:
This RFI is associated with an IRS Criminal Investigation Division (CI) pilot program. CI Cyber Crimes is requesting information on systems that will allow developers and testers to conduct investigative research into distributed ledger transactions involving privacy cryptocurrency coins.
The privacy-focused crypto tokens mentioned in the IRS-CI request include “monero (XMR), zcash (ZEC), dash (DASH), grin (GRIN), komodo (KMD), verge (XVG) and horizon (ZEN). to this, the IRS wants data regarding offchain and sidechain networks such as “Lightning Network (LN), Raiden Network, Celer Network, Plasma, Omisego” and coins that have integrated the Schnorr Signature algorithm such as bitcoin cash (BCH).
The U.S. tax agency says the entity currently has little knowledge of these protocols and is looking to build on its expertise. The IRS would also like to take advantage of applications that allow them to investigate these privacy tools and coins.
“Acquiring applications to allow an investigation to more easily track privacy coins and other protocols that provide anonymity to offenders would allow investigations to be more effective, as well as facilitate a higher level of deterrence by making more difficult to conceal criminal activity. It also provides investigative efficiency that is currently limited, “notes the IRS request.
Likewise, there are only “few investigative resources” that allow investigators to intercept or track transactions involving “layer 2 network protocol transactions. [and] sidechain logs. “Including” distributed ledgers that adopt signature algorithms that provide privacy to offenders. “
The IRS notes in the request that the use of privacy coins and offchain / sidchain networks are “becoming more popular for general use.” But the tax agency is also “seeing an increase in use by illicit actors.”
What do you think of the recently published IRS-CI Cyber Crimes Unit application? Let us know in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons, beta.sam.gov/
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