The U.S. government knows cryptocurrency is being bought and used by more people, and it is willing to spend millions in taxpayer dollars to find out who has it and how it is being used.
There are ways to track what is usually thought of as anonymous cryptocurrency transactions, according to a report by research firm Diar. That’s why U.S. government agencies have collectively spent $5.7 million hiring contractors to use blockchain analysis to link an individual’s identity with his or her cryptocurrency funds.
“Since the beginning of the year, the amount that the government agencies paid to blockchain analysis companies more than tripled,” according to the report, which Diar said is based on public records. “The vast majority of government deals have been contracted to New York-based Chainalysis.”
The top spender among U.S. government agencies is the Tax Man. The report found the Internal Revenue Service has signed nine contracts with cryptocurrency forensics providers worth a bit less than $2.2 million, or 38 percent of the government’s spending on these blockchain services.
No. 2 in spending is Immigration and Customs Enforcement, which enforces the government’s immigration policies and investigates criminal activities involving foreign nationals living in the U.S. According to the report, ICE had taken out nine contracts amounting to $1.5 million, while the Federal Bureau of Investigation came in third with 12 contracts worth more than $1.1 million.
What about the financial regulators who might have more than a passing interest in cryptocurrencies? Well, the Securities and Exchange Commission comes in sixth on the list of spenders (behind the Drug Enforcement Agency) with seven contracts worth less than $185,000. It is followed by the Commodity Futures Trading Commission, with five contracts worth more than $117,000.