IRS Wants to Be Able to Trace ‘Untraceable’ Digital Currencies
The Treasury Department reportedly is investigating potential ways to trace currency that is known as untraceable, seeking to expand its visibility into cryptocurrency transactions. These transactions enable anonymity and allow for more privacy between the parties involved than most other blockchain-based exchanges. Cryptocurrency is transmitted virtually through a decentralized digital network.
Now, federal agencies are seeking new developments that would enable them to trace transactions despite updates such as Layer 2 protocols that allow for more scalability and speedier transactions. Law enforcement can scrutinize transaction data to identify those involved, but it is a timely and costly process. Other roadblocks in the agency’s initiative include privacy coins that can underpin completely anonymous transactions and obfuscate information involved.