AI could monitor all crypto transactions in the next 5 years

Chainalysis CEO Michael Gronager has predicted that artificial intelligence agents will be used by governments to track blockchain transactions and combat crypto-related crimes within the next five years. 

Speaking at the Token2049 conference in Singapore on September 20, Gronager explained that AI's involvement in policing cryptocurrency transactions will increase efficiency, allowing authorities to scale their efforts and investigate more transparently across international borders. 

Gronager emphasised the benefits of AI automation over manual government investigations, stating that it prevents overlapping work by different departments and creates a streamlined process for identifying crypto crimes. 

He believes crypto will become the most effective tool for solving crimes because of its scalability and transparency. 

According to Gronager, “in some years from now, crypto would more or less be the only way you would want to solve crime.” 

The rise of AI in this space also has implications for tax enforcement. 

Gronager mentioned that governments, such as the U.S. Internal Revenue Service (IRS), are already using AI to track potential crypto tax evaders. 

However, he noted that individuals who cashed out cryptocurrency over five years ago might not be tracked, as tax enforcement systems were less advanced at that time. 

Despite the advancements in AI, Gronager highlighted the challenges posed by privacy-focused cryptocurrencies and crypto mixers, such as Monero, which make it more difficult to track illicit activities. 

However, he pointed out that privacy transactions now make up less than 1% of all crypto transactions, suggesting their growth has not kept pace with the broader crypto market. 

According to a July report by Chainalysis, around $100 billion has been transferred from illicit wallets to crypto exchanges since 2019, further underscoring the need for improved monitoring solutions like AI to address increasing crypto crime.