Data Firm Inca Digital CEO: Crypto Innovation Is a Matter of National Security

Crypto innovators must be encouraged to stay in the U.S. , said the CEO of software developer Inca Digital. The Washington, D.C., company recently won a Defense Department contract to look into crypto security risks.

“There’s a wide acknowledgement that while there are national security issues, it is a national security imperative in the U.S. to foster [crypto] innovation here [and] to have startups in the U.S. and not leaving to go overseas,” said Adam Zarazinski, Inca Digital’s CEO, on CoinDesk TV’s “First Mover” on Friday.

According to a press release, the Defense Department's Defense Advanced Research Projects Agency (DARPA) awarded Inca Digital's government contracting division, Inca Digital Federal, a Phase II Small Business Innovation Research (SBIR) contract to research advanced methods for analyzing activity related to financial applications of distributed ledgers, in a project called "Mapping the Impact of Digital Financial Assets."

Inca will provide technology that can be “used to identify risks to U.S. national security globally,” Zarazinski said.

Read more: DARPA to Research Risks of Crypto to National Security in Partnership With Inca Digital

“The technological development that we’re doing is ultimately to foster innovation here in the United States,” Zarazinski added.

Inca is trying to identify how crypto may influence traditional financial systems, he said. U.S. government agencies are concerned with the economic impact of crypto and its blockchain-based use case as it relates to illicit activities such as money laundering, hacks and sanction evasion.

Not only do those factors have “wide-ranging implications” for U.S. national security, but they can also affect “an individual’s belief [in] crypto,” Zarazinski said.

Read more: National Security at Stake With Biden's Crypto Executive Order / Opinion

He added that so far Inca has connected to an estimated “350 trading venues globally,” including “centralized exchanges, indexes and peer-to-peer networks.” The software company also collects data from social media sites, including Twitter, Reddit, Telegram and Discord, said Zarazinski.

“We collect blockchain data and run our nodes, similar to that of forensics companies, but we also have a heavy emphasis on collecting market data,” he said. “We bring that data into our system, and then basically try to connect crypto to the real world, [to] analyze markets and ensure market integrity,” he added.

Addressing privacy concerns, Zarazinski said U.S. government agencies aren’t making “some play on surveilling Americans and what they’re doing with crypto.” Rather, “this is looking at what’s going to happen with crypto and global markets in the next 10 years and what role can the U.S economy play within that.”

Read more: The NSC Labels Blockchain a National Security Issue / Opinion