IRS Says It Needs Tools for Cracking Crypto Wallets

The US IRS is seeking crypto wallet cracking tools in order to "master cybersecurity investigation in measured, repeatable and consistent digital forensic processes."

May 25, 2021, | AtoZ MarketsAs the population of the United States increasingly falls in love with trading and buying goods with cryptocurrencies, the Internal Revenue Service (IRS) is looking for ways to monitor wallet activity.

Storage vs illicit activities

To stay ahead of the game, the IRS launched an Official Information Request (RFI) regarding cryptocurrency wallet breaches.

Most traders use crypto wallets to store their digital assets, but also to add a layer of security. Crypto wallets use private keys to access funds independent of the broker making the actual transactions.

As you might expect, some use blockchain to conceal illegal and illicit activities. However, when the IRS crime department needs to look at some people's financial records, they hit the wall trying to see information from seized cryptocurrency wallets.

Read also: IRS Will Seize Crypto Assets from Traders for Tax Evasion

In an official information request sent to, the Treasury Department and the IRS state that:

Although several well-known cyber penetration testers published vulnerabilities in specific devices, the process of decrypting hardware devices to gain access to wallets was difficult. The clear result of this requirement is to harness cybersecurity research into measurable, repeatable, consistent digital forensic processes that can be trained and then tracked in a digital forensic laboratory.

Hackers on behalf of the law

The IRS says it needs tools and processes that would be useful with any crypto wallet offered to clients today. This includes software and hardware models. The published RFI doubles this idea, requiring skills in software analysis, reverse engineering hardware, and "deconstruction of printed circuit boards and integrated circuit packages".

Read also: US Court Authorizes IRS Access to Kraken Customers Data

The proposed agreement will aim to achieve several key objectives. Several of these goals are validating cybersecurity research in crypto wallet mining, identifying new methods of accessing crypto wallets, identifying useful cryptographic models for exploits, and documenting processes, equipment, and skills needed for reproduction in advanced forensic laboratories.

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