The US military will get access to a national security threat that is encrypted.

The military's innovation division is looking closely at cryptocurrencies to see what risks they pose to national security and law enforcement as they become more popular.

The Defense Advanced Research Projects Agency (DARPA), which made the first technology that makes the internet work, has hired the crypto intelligence firm Inca Digital to run the experiment for a year.

The startup will make tools that will give the Pentagon a detailed look at how crypto markets work. This will help the government fight against illegal use of digital assets.

Mark Flood, a program manager at the CIA, told The Washington Post in an interview that this project is making a detailed map of the cryptocurrency world.

In addition to fighting illegal finance, the agency wants to use the data to learn more about how traditional financial markets work, where it is harder to get precise information.

The agreement is the latest sign that the government is doing more to stop bad governments, terrorists, and other criminals who use cryptocurrency to fund their operations.

Last month, the Treasury Department announced its first-ever sanctions against software code. They were aimed at Tornado Cash, a business that helped hackers from North Korea and other countries launder cryptocurrency that they had stolen.

This week, the agency put out a request for public feedback on the risks of cryptocurrency to national security and criminal financing. Separately, the Justice Department said earlier this month that 150 prosecutors will work together to coordinate investigations and prosecutions related to crypto.

Flood said that hackers working for the North Korean government stole billions of dollars worth of data in order to fund the regime's weapons development. And right before the invasion this spring, the Ukrainian government saw Russian attacks on its financial sector.

The history of cryptocurrencies, from Bitcoin to Stablecoin, is like a house of cards.

"We just need to recognize that the financial sector could become a part of modern warfare in the future," said Flood, a former Treasury official who has studied systemic financial risk. "Anything we can do to strengthen and protect the US financial sector and the financial sectors of our allies is good."

Still, governments have had a hard time figuring out how to control cryptocurrency. Because regulators don't keep an eye on the business, it has turned into a shadow financial system that skilled thieves can use in many ways.

Adam Zarazinski, the CEO of Inca Digital, said that the work his company will do for DARPA will be "pretty varied." The project wants to help the government, among other things, figure out how money moves into and out of blockchain systems, which are public ledgers kept on a network of computers.

It is also meant to tell the difference between real cryptocurrency trading and trading done by bots and to spot scams that use cryptocurrency.

"Crypto frauds are causing a lot of worry right now," said Zarazinski, a former Air Force officer who used to work for Interpol in criminal intelligence. He said that the people behind the scheme are usually "well-organized, international criminal networks that are either directly backed by opposing countries or have their tacit approval to carry out these operations. They steal billions of dollars from Americans and Europeans."

The founder of cryptocurrency who has been in trouble says he is not on the run. No one knows where he is, though.

This is not the first time that DARPA has tried to use blockchain technology. In June, the government released a report from the cybersecurity firm Trail of Bits. The report found that blockchains often have flaws that make them less secure than they say they are.

Flood, however, said that the agency's current work is not meant to keep track of specific cryptocurrency users. He said, "DARPA does not do surveillance." "I want to stress that we are very careful in our research not to include information that could be used to find out who someone is."