To win over crypto cybercriminals, the UK’s tax authority HM Revenue and Customs (HMRC) wants to deploy a tech tool. The tool can help it identify cybercriminals trading in cryptocurrencies. It will be purely based on blockchain technology to effectively combat crypto cybercriminals. For this reason, the tax agency from Britain is now inviting suitable contractors to develop the tech tool.

What does the Agency Want to Combat Crypto Cybercriminals?

The technology is an open contract worth 100,000 pounds sterling and should gather intelligence through cluster analysis. According to the official announcement, HMRC’s cybercrime team hopes this will help them correlate crypto-asset transactions with service providers. As opposed to free online tools and human analysis that exist, HMRC reportedly believes a commercial product would help the agency illuminate the blind spots that currently allow criminal activity to fester.

Specifically, HMRC is looking for a tool that, at a minimum, would help track seven digital assets – bitcoin (BTC), bitcoin cash, ether (ETH), ether classic (ETC), XRP, litecoin (LTC) and Tether (USDT) stablecoin. Her Majesty’s Revenue & Customs would also prefer a tool that could develop the ability to track privacy-oriented coins such as Monero (XMR), Zcash (ZEC), and Dash (DASH).

Britain’s tax agency is ready to spend £100,000 on licensing for the chosen tool. But it is inviting proposals from potential suppliers until January 31 and looking to start a contract on February 17.

Cybercrimes Develop Gradually

The cybercrime team at UK’s tax agency is created to shield the revenue from attempted fraud. Specifically, HMRC’s repayment system is vulnerable to complex and clever criminality. It’s widespread and not limited to hacking, malware, and distributed denial of service are leading offenders. On the other hand, phishing scams are the most notable and evolve from email to text form.

So-called “SMiSHing” attempts work because people are readily responsive to HMRC and the criminal messages appear credible. Dedicated efforts have helped the cybercrime team progress from the 16th “most phished brand globally” to the 146th in 2018.

Who Could be the Potential Suppliers?

Blockchain analytics firms like Chainalysis, Elliptic and CipherTrace could be some of the potential suppliers as these firms have previous records of tracking crypto transactions. For instance, UK-based Elliptic has recently tracked over $400 million worth of XRP transactions related to illegal activities such as scams and Ponzi schemes.

Many of these crypto-asset transactions use blockchain technology to keep the records public. Whilst the transactions are typically public, the participants undertaking them are not. HMRC quotes this statement in its official announcement.

UK’s tax agency is, therefore, seeking the provision of a tool that will support intelligence-gathering methods to identify and cluster crypto-asset transactions into linked transactions and identify those linked to crypto-asset service providers.

Last August, HMRC was also demanding customer and transaction information from crypto exchanges. The tax agency had sent out letters to Coinbase, eToro, CEX.IO and other crypto exchanges requesting customers’ names and transaction histories, stating that “these transactions may result in potential tax charges and HMRC has the power to issue notices requiring exchanges to provide this information”.