A survey of government agencies by blockchain analytics firm Chainalysis highlights the need for better tools, training, and support for cryptocurrency-related investigations.

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blockchain data platform dug to this topic in their 2022 State of Cryptocurrency Investigations Survey, with 74% of respondents indicating that their agencies are under-equipped to investigate crypto-related crimes.

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Chainalysis surveyed nearly 300 respondents from 183 public sector agencies in America and Canada to uncover challenges and successes in the sector.

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An overwhelming number of respondents indicated that cryptocurrencies are relevant to their investigations and that their respective agencies could do well to invest more resources.

While crypto is central to some investigations, the majority of respondents agreed that this space could positively impact the financial system and disagreed with the suggestion that cryptocurrencies were used primarily by criminals.

Chainalysis noted that the growth in the legal use of cryptocurrency far exceeds the growth in criminal use. However, the percentage of illegal use is significant enough in dollar terms that the public sector should be prepared to investigate.

Respondents also suggested that their agencies have investigators or analysts who specialize in crypto-related investigations. The survey also showed that many agencies do not use dedicated blockchain analytics tools, and 74% of respondents believe that their agency is not sufficiently trained to investigate crimes related to cryptocurrencies.

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Chainalysis called this a major issue given the ever-changing industry, citing the recent shift from centralized services to decentralized finance (DeFi) protocols that are more complex and difficult to research.

“If agencies do not become proficient in investigating cryptocurrencies now, their knowledge gaps could widen, leaving them further behind criminals who regularly use cryptocurrencies.”

The survey showed that more than half of the 300 respondents experienced more than ten cryptocurrency-related incidents per year, and almost 40% experienced more than 20 incidents. Fraud, scams, drugs, cybercrime, and ransomware were the most commonly investigated crypto-related crimes.

Chainalysis has highlighted the need for reliable data based on robust blockchain analysis tools that provide simple and valuable data visualization. Another issue raised by respondents was training in the analysis of cryptocurrencies and blockchain, and partnerships with the private sector could provide these tools and resources.