According to a Chainalysis industry study, law enforcement and regulatory organizations looking into cryptocurrency-related occurrences require greater data, training, and private partnerships.
Better tools, training, and assistance are required for cryptocurrency-related investigations, according to a public agency poll performed by blockchain analytics company Chainalysis.
In its 2022 State of Cryptocurrency Investigations Survey, the blockchain data platform examined the issue; 74 percent of respondents said their agency lacked the tools necessary to look into crimes involving cryptocurrencies.
About 300 people were surveyed by Chainalysis from 183 public sector organizations in the US and Canada to better understand the difficulties and achievements encountered there.
The vast majority of respondents claimed that cryptocurrencies were important to their inquiries and that it would be wise for their individual agency to allocate additional funds.
Despite being at the center of various investigations, the majority of respondents felt that the financial system might benefit from this area and rejected the notion that cryptocurrencies were mostly utilized by criminals.
According to Chainalysis, the rise of lawful bitcoin use is outpacing the increase of illicit use by a wide margin. However, the percentage of illicit use is high enough in terms of U.S. dollars that the public sector needs to be ready to look into it.
Additionally, respondents said their organizations employed analysts or investigators with expertise in cryptocurrency-related investigations. According to the report, many agencies do not employ specific blockchain analysis tools, and 74 percent of respondents think their agency is underprepared to look into crimes involving cryptocurrencies.
Given the industry’s ongoing change, Chainalysis emphasized this as a significant issue, highlighting the recent switch from centralized services to decentralized finance (DeFi) protocols, which are more complicated and challenging to study:
“If agencies aren’t becoming proficient in cryptocurrency investigations now, their knowledge gaps could compound, causing them to fall further behind the criminals exploiting cryptocurrency regularly.”
More than half of the 300 respondents to the poll saw more than 10 cryptocurrency-related cases in a year, and almost 40% saw more than twenty. The most often investigated offenses using cryptocurrency were scams, fraud, narcotics, cybercrime, and ransomware.
Chainalysis emphasized the necessity for reliable data supported by powerful blockchain analysis tools that enable quick and insightful data visualizations. Another issue brought up by respondents was the need for training in cryptocurrency and blockchain analysis, while collaborations with the private sector may provide these tools and resources.