The IRS says it plans to award contract for crypto startup's cross-chain tracing software

A notice published last week by the Internal Revenue Service indicates that the U.S. tax agency wants to beef up its capacity to track cross-chain transactions.

The term "cross-chain" generally applies to the ability for two or more blockchain networks to interact or communicate with one another, often in the context of users being able to transact from one to the next via so-called bridges. The IRS notice, published on September 16, suggests that the agency wants more insight into these processes as part of its criminal investigatory efforts.

The notice states:

"There are multiple cryptocurrency tracing platforms in the market today, however based on the way blockchain technology works, a significant portion of the intelligence and coverage each provides is unique to each provider. Additionally, the TRM Forensics Web-Based tool provides unique capabilities not currently found in tools from other providers. CCU is requesting this specific platform due to its cross-chain analysis tracing capabilities and unique methods for visualizing various cryptocurrencies across blockchains."

The notice refers to a contract it wishes to award to TRM Labs Inc., a U.S.-based company. TRM raised a $14 million Series A funding round this summer, led by Bessemer Venture Partners. Backers of the company include PayPal Ventures, the payments company's venture arm.

The Block reported in June that the IRS is seeking a broad expansion of its crypto capabilities. The agency is seeking more funding from Congress in order to grow its crypto-related enforcement efforts and hire outside experts.

On Monday, crypto exchange operator Coinbase struck a deal with the U.S. Department of Homeland Security for the use of its own analytics software.