The US government is tentatively exploring ways to forensically analyze privacy coins like Monero and Zcash.
That’s according to a document published by the Department of Homeland Security. Specifically, the document “seeks applications of blockchain forensic analytics for newer cryptocurrencies, such as Zcash and Monero.”
Unlike Bitcoin, transactions on the Monero network are completely private, utilizing “burn-after-reading” stealth addresses and decoy transactions to obscure the true sender’s information.
Zcash offers the choice between transparent and fully private transactions, using zero-knowledge-proof cryptography to obscure the data.
The Department of Homeland Security document wants to analyze Monero and Zcash for criminal activity. The document reads: “There is similarly a compelling interest in tracing and understanding transactions and actions on the blockchain of an illegal nature.”
How exactly they will achieve it is not yet outlined in detail and the report stresses that it is not an explicit request for proposals. However, the report tentatively suggests: “[Designing] a blockchain analysis ecosystem or modify an existing one, that enables forensic analysis for homeland security.” Further, it invites interested parties to comment on the topic.