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DARPA backs Inca Digital Crypto Research Project

darpa inca digital

US government agency DARPA has awarded analytics firm Inca Digital a funded research contract in investigating how cryptocurrencies have impacted US national security.

The Defence Advanced Research Projects Agency (DARPA) entered into a contract with analytics firm Inca Digital’s government contracting division, Inca Digital Federal to “to research advanced methods for analysing activity related to financial applications of distributed ledgers in a project called: ‘Mapping the Impact of Digital Financial Assets’.”

The Phase II Small Business Innovation Research (SBIR) contract was made with the intention “to understand and visualise how digital assets implicate national security.”

At the project’s launch, Adam Zarazinski, CEO of Inca Digital, said: Given the increasing prevalence of digital assets, the Department of Defence and other federal agencies need to have better tools to understand how digital assets operate and how to leverage their jurisdictional authority over digital asset markets globally.”

Inca Digital Federal’s project

As an analytics firm, Inca Digital and its government contracting subsidiary Inca Digital Federal analyse data “across crypto markets, blockchains, and news and social media to deliver comprehensive intelligence to the financial institutions, technology firms and government entities that are shaping the digital asset space.”

The SBIR contract will have Inca Digital Federal “develop a first-of-its-kind cryptocurrency ecosystem mapping tool for analysing cross-market crypto-financial data and risk.”

The contract also anticipates Inca Digital to give information about the role that crypto plays in illicit financial activities, including money laundering, market manipulation, and actions from state actors that may pose risks to U.S. national security.

Inca Digital Federal will also “provide insight into the use of blockchain-based technologies linked to money laundering, terrorist financing, and sanctions evasions across systems.”

Research will also cover the evolution and development of crypto, how crypto may impact traditional finance, cash flows in and out of blockchain systems, and “identifying where recipients of cryptocurrency can exchange it for local fiat currency, or goods and services, globally.”

Joining the industry of on-chain sleuthing services, Inca Digital will offer similar services to firms such as CipherTrace and Chainalysis. Upon launch, the mapping tool will be available for use by the US government and private firms. 

An ongoing saga into crypto regulation

Inca Digital and DARPA’s SBIR contract has come at a time where regulatory concerns in crypto run rampant.

Since the May meltdown of the Terra ecosystem, the US government has been developing an even tougher stance on crypto. In August, the US Treasury Department had blacklisted the Ethereum mixer Tornado Cash upon investigations into money laundering.

Tornado Cash’s blacklisting by the US Treasury Department landed the firm in its ‘specially designated nationals’ list, likening Tornado Cash’s activities to terrorist organizations and international criminals.

DARPA, a research agency within the US Department of Defence, also works closely with the US military in developing new technologies. Famously, DARPA had a key role in developing some of the first iterations of the internet.

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