The US Immigration and Customs Enforcement (ICE) agency has seen “a substantial increase” in cases involving digital currencies in the drug trade, an official told Congress yesterday.

The comment was made by Matthew Allen, an assistant director for one of the Department of Homeland Security’s (DHS) investigative arms, speaking during a House of Representatives hearing on opioid abuse.

Homeland Security Investigations, or HSI, uses blockchain analysis to track digital currency payments connected to the heroin and fentanyl trades, according to Allen. And while the agency told the US Senate in a late 2013 statement that it was working to investigate criminal uses of the technology, his statements represent some of the first disclosures as to how it conducts those operations.

Allen told committee members:

“ICE has seen a substantial increase in cases in which private parties are acting as money service businesses to exchange digital currencies into fiat currency to enjoy the illicit proceeds of narcotics smuggling. The IFPCU also utilizes resources provided by the Treasury Executive Office for Asset Forfeiture’s Third-Party Money Laundering Initiative to support complex financial investigations.”

The initial interest for DHS in digital currencies traces back to the heyday of Silk Road, the now-defunct dark market. According to a presentation dated February 2014, the department said that it was working to “build the capacity of field agents to identify virtual currency exchangers”, but at the time made no reference to blockchain analysis.

Since then, DHS has also moved to fund blockchain-related projects, later telling CoinDesk that it was especially interested in applications related to security and IoT.

Homeland Security image via Shutterstock