Coinbase secures 4-year contract to work with US Secret Service

The U.S. Secret Service, the federal law enforcement agency under the U.S. Department of Homeland Security, is revealed to have been using Coinbase’s blockchain analytics service.

According to the United States directory for government contracts, USASpending.gov, the Secret Service paid $183,750 for a four-year contract with the digital currency exchange that allows them to use Coinbase Analytics. The agency began using Coinbase Analytics on May 11, 2020, and their contract expires May 10, 2024.

Secret Service, DEA, and the IRS

This news comes no more than one month after it was revealed that Coinbase (NASDAQ: COIN) had offered to license its analytics platform to both the Internal Revenue Service (IRS) and the Drug Enforcement Administration (DEA).

All three events—the DEA offering, the IRS offering, and now the Secret Service contract—were met with pushback from Coinbase users, who believed their privacy was in jeopardy due to these government agencies having the ability to view their on-chain activities. 

However, after platform’s Secret Service deal began to get media coverage, Coinbase CEO Brian Armstrong made an official statement regarding Coinbase Analytics. Armstrong led off by saying he doesn’t find anything related to Coinbase analytics newsworthy:

https://twitter.com/brian_armstrong/status/1282106541559156737

https://twitter.com/brian_armstrong/status/1282106585502769152

https://twitter.com/brian_armstrong/status/1282106700879654912

Armstrong explained that the Coinbase team used to use third party blockchain analytics services, but knew that they needed an in-house blockchain analytics service. After acquiring Neutrino in February 2019, they were able to bring that service in house.

Armstrong went on to say that building an analytics platform in-house is expensive and that Coinbase is looking to recoup their costs [from building Coinbase Analytics], which is one of the reasons why they license out their analytics platform. Licensing out Coinbase Analytics helps Coinbase build relationships with law enforcement agencies, which is ultimately beneficial for the digital currency ecosystem because it will catalyze the growth of digital assets, according to the executive.