74% of Government Agencies Feel Underequipped for Crypto Investigations: Report
A government agency survey conducted by blockchain analytics firm Chainalysis highlights the need for better tools, training and support for cryptocurrency-related investigations.
The blockchain data platform delved into the topic in its 2022 State of Cryptocurrency Investigations Survey, with 74% of respondents indicating their agencies were underequipped to investigate cryptocurrency-related crime.
Chainalysis polled around 300 respondents across 183 government agencies in the US and Canada to unpack the challenges and successes working in the sector.
An overwhelming number of respondents indicated that cryptocurrencies were relevant to their research and that their respective agencies would be wise to invest more resources.
Despite cryptocurrency being central to some surveys, most respondents agreed that the space could positively advance the financial system and disagreed with the suggestion that cryptocurrencies were mainly used by criminals.
Chainalysis noted that the growth of legitimate cryptocurrency use far outweighs the growth of criminal use. Still, the percentage of illegal use is significant enough in US dollars that the public sector must be prepared to investigate.
Respondents also indicated that their agencies have investigators or analysts who specialize in cryptocurrency-related investigations. The survey also indicated that many agencies do not use specialized blockchain analysis tools, and 74% of respondents believe their agency is not well equipped to investigate cryptocurrency-related crime.
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Chainalysis highlighted this as a major issue given the ever-changing industry, citing the recent shift from centralized services to decentralized financial protocols (DeFi), which are more complex and difficult to investigate:
“If agencies don’t become proficient in cryptocurrency investigations now, their knowledge gaps could widen, causing them to fall further behind the criminals who regularly exploit cryptocurrency.”
The survey showed that over half of the 300 respondents see more than ten cryptocurrency-related cases in a year, while almost 40% encountered more than 20 incidents. Fraud, fraud, drugs, cybercrime and ransomware were the most investigated crypto-related crimes.
Chain analytics highlighted the need for reliable data powered by robust blockchain analytics tools that enable simple and valuable data visualizations. Training in cryptocurrency and blockchain analytics was another point raised by respondents, while partnerships with the private sector could deliver these tools and resources.
