UK’s Tax Authority To Leverage Blockchain To Track Bitcoin Transactions

UK’s Revenue and Customs agency is ready to invest up to $130,000 towards the development and implementation of a new “cryptoanalysis” tool. 

According to a recent report, the United Kingdom’s tax authority, HM Revenue and Customs (HMRC) is looking for, “vendors to showcase their capabilities by demonstrating their expertise in the field of crypto-asset tracing.”

The new software tool will be used to help the tax authority trace several types of cryptocurrency transactions, which are stored anonymously on a blockchain.

Criminal Activity on the Blockchain

Although today, an increasing number of people are using cryptocurrency and digital assets for legal purposes, earning legitimate payments on their digital assets, there is still a looming concern about those who use virtual currencies for criminal activities. 

The concern is that, due to the anonymous transactions made possible by blockchain technology, cybercriminals and fraudsters around the world are able to leverage this anonymity for their own nefarious purposes. 

In fact, criminal activities, such as illegal gambling services, dark web operations, and tax evasion have been a common theme surrounding the blockchain industry ever since Bitcoin was first created back in 2009. 

Along with other government bodies, such as the U.S. SEC and CFTC, which are working tirelessly to bring more safety and security to the industry, the HMRC is now on the hunt to find a suitable tool for their FIS-DSI cybercrime unit to use to monitor blockchain-based transactions within the country’s jurisdiction.

The Hunt for a New Cryptoanalysis Tool

According to the HMRC, they are seeking the “provision of a tool that will support intelligence-gathering methods to identify and cluster crypto-asset transactions into linked transactions and identify those linked to crypto-asset service providers”.

Ideally, the government institution is looking for a software that can track transactions made on other blockchains such as the Monero, Zcash, and Dash blockchains. 

But for now, they are mainly concerned with finding a tool to monitor transactions on the most popular blockchains; Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Tether, Ripple, and Litecoin. 

While there will always be the concern that criminals can use the blockchain for illegal purposes, projects such as this go to prove that blockchain-based technology has much more to offer than just an alternative form of currency. 

The HMRC is currently accepting proposals from prospective tech agencies until the end of January, and have the 17th of February set as the scheduled start date for the project.