The US military needs to access crypto security threats to the country

The military's innovation office is doing a thorough look at cryptocurrencies to find out what risks the rise of digital assets poses to law enforcement and the nation's security.

The Defense Advanced Research Projects Agency, or DARPA, will do the research over the course of a year. DARPA is the group that made the first technology that helped the internet work.

In part to help law enforcement stop people from using digital assets illegally, the company will give the Pentagon tools that give a detailed look at how crypto marketplaces work.

Mark Flood, a program manager for the group, told The Washington Post that the current study "involves making a detailed map of the cryptocurrency universe."

The agency wants to use the information to learn more about how traditional financial markets work, where accurate information is harder to find, and to fight illegal funding.

The agreement is the latest example of how federal agencies are stepping up their efforts to stop terrorists, rogue governments, and other bad actors from using cryptocurrencies to fund their activities.

Last month, the Treasury Department used its first-ever software code sanctions to go after Tornado Cash, a business that helped North Korean hackers and others buy back stolen cryptocurrency.

This week, the agency asked the public what they thought about the risks cryptocurrencies pose to national security and how they could be used to fund illegal activities.

A separate announcement says that the Justice Department will set up a national network of 150 prosecutors this month to coordinate investigations and charges related to cryptocurrencies.

Flood says that cyberheists done by hackers working for the North Korean government have given the country billions of dollars for its weapons development program. Also, just before Russia invaded this spring, the Ukrainian government said its financial sector was attacked by Russia.

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Flood, a former Treasury official who has studied systemic financial risk, says that anything we can do to strengthen and protect the U.S. financial sector and the financial sectors of our allies is a good thing. Flood said, "We just need to admit that the financial sector could be a part of modern warfare in the future."

Even so, governments have had trouble keeping cryptocurrencies under control. Due to the lack of legal restrictions, the business has turned into a shadow financial system that criminals with a lot of skill can use in many ways.

The CEO of Inca Digital, Adam Zarazinski, said that the company's work with DARPA will be "quite broad." The goal of the project is to help the government understand how money enters and leaves blockchain systems, which are open ledgers kept on a network of computers.

It also wants to find cryptocurrency-based scams and separate real cryptocurrency trading from activities that are done by bots.

Zarazinski, a veteran of the Air Force who used to work for Interpol as a criminal intelligence officer, says that there is a lot of worry about cryptocurrency scams right now.

He said that the people behind the schemes are usually "well-organized, international criminal networks" that are "often directly supported by rival governments or given tacit permission to carry out these operations," and that Americans and Europeans are losing billions of dollars because of them.

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The project is not the first time that DARPA has used blockchain technology. In a report that came out in June after the government hired the cybersecurity company Trail of Bits, it said that blockchains usually have flaws that make it hard to believe that they are secure.

Flood did say that the agency's latest project is not meant to keep track of specific cryptocurrency users.

He said, "DARPA does not do surveillance." We are careful not to use information that could be used to find out who someone is in this research.