IRS Looking Into Ways to Monitor Activity Within Crypto Wallets

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In Brief
  • The IRS is looking into ways to monitor activity within wallets.

  • The IRS says they require tools and processes that would be usable with any crypto wallet currently offered to customers.

  • The proposed contract will aim to accomplish a few key goals.

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The Internal Revenue Service (IRS) Digital Forensic team is looking into cracking tools for crypto wallets to “tame the cybersecurity research into measured, repeatable, consistent digital forensics processes.”

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As the population of the United States becomes more and more enamored with trading and purchasing goods with cryptocurrencies, the IRS is looking into ways to monitor activity within wallets. In order to keep themselves ahead of the game, the IRS has issued an official request for information (RFI) into cracking crypto wallets. 

Most traders use crypto wallets to store their digital assets but also to add a layer of securityCrypto wallets use private keys to access funds separate from the broker making the actual transactions.

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As one might expect, some are using blockchain to hide illegal or illicit activities. When the IRS Criminal Division has to look into the financial records of certain people, however, they are hitting a wall when trying to see information from seized crypto wallets. In an official request for information posted to SAM.gov, the Treasury Department and IRS state that:

“Though a few known cyber penetration testers have published vulnerabilities on specific devices, the process of decrypting the hardware devices to gain access to the wallets has been challenging. The explicit outcome of this requirement is to tame the cybersecurity research into measured, repeatable, consistent digital forensics processes that can be trained and followed in a digital forensics’ laboratory.”

The IRS says they require tools and processes that would be usable with any crypto wallet currently offered to customers. This includes software and hardware models. The posted RFI doubles down this idea by requiring the ability to analyze software, reverse engineer hardware, and the “deconstruction of printed circuit boards and integrated circuit packages.”

The proposed contract will aim to accomplish a few key goals. A few of these goals are to validate cybersecurity research in crypto wallets exploration, identify new methods of accessing crypto wallets, identify usable cryptographic models for exploits, and document the processes, hardware, and skills needed for reproduction in advanced digital forensics labs.

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Matthew De Saro is a journalist and media personality specializing in sports, gambling, and statistics. Before joining BeInCrypto, his work was featured on Fansided, Forbes, and OutKick. With a background in statistical analysis and a love of writing, he takes an outside-the-box approach to reporting news.

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