Most cryptocurrency users will be all too aware of what blockchain analysis means. Several firms around the world specialize in tracking transactions on public blockchains to ensure there is no nefarious activity conducted on them. Chainalysis is one of the market leaders in this area. The company recently inked a new set of deals with the US government to continue providing this service. Any non-anonymous currency will be tracked and scrutinized pretty closely for years to come, by the look of things.
US Government Appreciates Chainalysis
Not too long ago, we reported that the IRS was working together with Chainalysis to ensure that Bitcoin users weren’t using cryptocurrency for money laundering or tax evasion purposes. The company’s blockchain analysis services link real-world identities to particular Bitcoin transactions. Everyone should know by now that Bitcoin possesses no privacy or anonymity traits, nor was it ever intended to.
That fact makes it a lot easier for firms such as Chainalysis to perform blockchain analysis services. Knowing that a company like this one works closely with the US government is both good and bad. It helps validate Bitcoin as a tool not suited for criminal activity, but it also means people may face a lot of unnecessary scrutiny in the process. There is a very fine line between privacy and preventing criminal activity, unfortunately.
Now that Chainalysis has inked a few new contracts with the US government, things will get very interesting. The company is still on the IRS payroll in both the Western and Midwest regions, which is to be expected. There is every reason for the IRS to pay attention to the use of Bitcoin, especially now that the currency has become somewhat easier to keep tabs on. However, the firm is making some inroads with other US government agencies as well, which will create a very interesting future, to say the very least.
To be more specific, the Immigration and Customs Enforcement Agency has started using the services of Chainalysis as well. Additionally, the DEA is paying close attention to the “custom computer programming services” provided by the firm. It will be interesting to see how all this plays out in the next few months and years. Although few people use Bitcoin for the purposes of money laundering and evading taxes in the US as far as we know, there is no reason to think no one is doing it. Weeding out the bad elements is still the top priority.
Moreover, it remains to be seen how all this will impact the ongoing IRS-Coinbase legal battle. The Internal Revenue Service aims to obtain customer records from Coinbase over various time periods. The agency’s main objective is to ensure no one has effectively used the exchange to launder proceeds from illegal activity or to evade taxes with Bitcoin. It is unclear if the government’s request will ever be granted, although its improved partnership with Chainalysis should bring most information to light regardless.
All of this goes to show that the US government is all too aware of what Bitcoin is and how it works these days. Moreover, officials know that people can use this cryptocurrency for many different purposes, including evading taxes and laundering money. Chainalysis has an interesting future ahead, but it remains to be seen if any of this will have a significant impact on Bitcoin moving forward. Analyzing the blockchain has become somewhat of a trivial matter, by the look of things. In the long run, cryptocurrencies focusing on anonymity and privacy may pose a much bigger challenge to Bitcoin.