In light of the rise of digital assets, the US military's innovation office is launching a comprehensive assessment of cryptocurrencies that will examine how the exposure of digital assets will affect national security and law enforcement. 

A new research project by the Defense Advanced Research Projects Agency (DARPA) will explore distributed ledger financial applications. Throughout the decades, DARPA has been responsible for pioneering technologies, including the internet, weather satellites, GPS, drones, and voice interfaces.

As part of the year-long project, DARPA has hired a crypto intelligence firm, Inca Digital, to provide the Pentagon with a granular view of the complexities of the cryptocurrency market, in part to assist law enforcement agencies in cracking down on illicit cryptocurrency activities. 

Cryptocurrencies are digital assets used for exchange, where ownership information is stored in a secure digital repository, which keeps records of transactions, regulates currency creation, and validates ownership transfers. 

During an interview with The Washington Post, Mark Flood, the agency's program manager, explained that “The program underway here involves mapping out the cryptocurrency universe in some detail.” 

The information collected by the office will be used to gain an understanding of the factors that influence traditional financial markets, where detailed information is a bit more difficult to obtain. 

CEO Adam Zarazinski, of Inca Digital, says the collaboration will help the government better understand blockchains and make it easier to detect cryptocurrency scams. 

This latest development is indicative of the fact that the federal government has stepped up its efforts to combat dictatorships, terrorist acts, and other criminal entities using crypto to sustain their activities and fund their operations.