The United States may have some of the world’s best cryptographers working for the National Security Agency and other spy shops, but the Internal Revenue Service (IRS) is crowdsourcing at least part of its effort to beat the algorithms that cloak information about certain cryptocurrencies.
The agency recently issued a request for proposals from anyone who can help track payments using the Monoro or Lightning protocols and similar approaches to hiding tracks.
“The use of privacy coins is becoming more popular for general use, and is also seeing an increase in use by illicit actors. For example, in April 2020 a RaaS (Ransomware as a Service) group called Sodinokibi (a former affiliate with the GrandCrab RaaS group) stated that future ransom request payments will be in Monero (XMR) rather than bitcoin (BTC) due to transaction privacy concerns,” the agency states in its RFP.
“Currently, there are limited investigative resources for tracing transactions involving privacy cryptocurrency coins such as Monero, Layer 2 network protocol transactions such as Lightning Labs, or other off-chain transactions that provide privacy to illicit actors,” the release states.
Among the assertions made in the RFP is that developers of successful cracking software will not have to disclose its inner-workings to the IRS.
As for why it’s using the unusual procurement method, the agency wrote in today’s release: “The federal government struggles at times with identifying ways to test, purchase and deploy innovative technology solutions. A large function of this is how long it takes to not only purchase the actual solution, but also test it, provide feedback and ultimately decide how (and whether) to deploy the solution. In other words, this is not simply a ‘how quickly can we buy it,’ but also a ‘how do we test it and decide whether or not to fund it for deployment.’ There are also times when the federal government prescribes a specific approach to a solution, and then asks who can do it best, and for the lowest price. This can limit innovation, and is often not the best approach when looking for emerging technologies and how their inclusion can benefit the government.”
The new program, entitled XCEED (eXtended Compliance End-to-End Distributed) blockchain program, will cover the entire process of compliance from design to production, the release says. Automotive industry partners, including Continental, Faurecia, Plastic Omnium and Saint-Gobain, worked on the project.
The program was developed in concordance with auto makers and is intended to bolster the processes, as the new market surveillance regulations from Sept. 1 have just taken effect. The controls concerned vehicles already on the market and, as such, the entire compliance process needs to adjust now.
By using blockchain, relevant information can be easily passed and tracked between multiple actors, allowing for quicker sharing and greater efficiency. XCEED, the release says, aims to craft a consolidated network for information trades between parts manufacturers and vehicle manufacturers, intending to allow all parties to maintain control and keep data safe.
IBF’s recently-created flagship Digital IBF Lab will aim to make an ecosystem in blockchain based around what the release calls relationship-based transactions, encompassing everything under the umbrella of philanthropic or non-profit ventures.
IBF CEO Mohammed Alim said the new initiative was intended to be different from other Islamic programs centered around charity, such as zakat, sadaqah or cash waqf, which traffic in one-time payments from the donor to the beneficiary. A blockchain-based project would help donors keep track of projects they might be fond of, he said.
Alim said the use of blockchain “is expected to bring in its numerous other benefits, e.g. enhanced transparency, reduced cost of intermediation and an enhanced donor base (crypto-donors).”
“From the standpoint of the agent (charity), the new framework should mitigate donor attrition risk. The notion of ‘feel the impact as you give’ is expected to induce relationship-based donation and a longer-term bondage between the actors (donor, beneficiary and intermediary),” Alim said, according to the release.
After the charity project is done, IBF intends to introduce similar technology for other sectors of the economy, including trade and commerce.