U.S. Government Triples Blockchain Intelligence Investment Amid Growing Crypto Surveillance

Government Agencies Dive into Blockchain Analysis

According to a Diar report from September 24, U.S. government agencies have ramped up their investment in blockchain intelligence firms, increasing their financial commitment significantly in just a year. It appears that officials are embracing technology that can help them track the digital dollar trail, leading them directly to compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations.

Big Money for Big Data

Diar reveals that government entities have funneled an impressive $5.7 million into blockchain analysis firms, out of a staggering total of $28.8 million invested so far. If anyone had doubts about the commitment to monitoring cryptocurrency transactions, they can now rest assured—it’s not just small change!

• Major Players: The majority of hefty contracts have been awarded to Chainalysis, a New York-based blockchain intelligence firm.
• IRS Cash Flow: Their biggest contract? A cool $1.6 million with the IRS in August. Apparently, Uncle Sam is particularly invested in identifying tax evaders hiding behind blockchain anonymity.

Who’s Spending What?

It seems the IRS isn’t alone in its spending spree. Diar’s report highlights distribution among other agencies:

• IRS: Leading the charge.
• ICE: A close second.
• FBI: Working hard to pin down the bad guys.

Together, these three heavy-hitters account for a whopping 85% of total government blockchain spending, with various other agencies nibbling on smaller contracts.

The ICO Dilemma

Shifting gears, Diar’s report took a moment to talk about Initial Coin Offerings (ICOs). It seems they had a rough patch in 2018, having raised double the funds compared to the previous year, but with a twist – 70% of tokens are now worth far less than what they were funded at. Talk about a budget cut!

• 2018 ICOs raised a staggering $12 billion.
• However, 402 out of 562 projects are now collectively valued at $2.2 billion!

That’s a jaw-dropping loss of $6 billion in market cap, making investors pull out their hair as if they were trying to untangle a charger cable.

Rise of Blockchain Intelligence

The growing necessity for blockchain intelligence firms hasn’t gone unnoticed, especially after the high-profile indictment from the U.S. Department of Justice. It sent waves through the crypto community when Russian officials allegedly used crypto to undermine the 2016 presidential elections. As it turned out, the need for regulation and tracking in cryptocurrency is increasingly becoming a hot topic.

Jonathan Levin, co-founder and COO of Chainalysis, found himself in the spotlight (and many interviews) after the news broke about the indictment. He was cautious not to disclose the firm’s involvement in the case, which probably left many journalists more curious than before.