The Bank for International Settlements (BIS) has partnered with several European central banks to create a crypto tracking platform.
Specifically, the Bank for International Settlements (BIS) has unveiled a proof-of-concept (PoC) initiative designed to monitor transactions occurring within the cryptocurrency sector, both on-chain and off-chain. Collaborating with institutions such as Deutsche Bundesbank, De Nederlandsche Bank, the European Central Bank, and the Bank of France, the BIS has introduced the Project Atlas PoC aimed at assessing the broader economic relevance of cryptocurrency markets and decentralised finance (DeFi) protocols.
The BIS Innovation Hub has released details of this concept, with the primary objective being to offer insights, information, and a comprehensive understanding of the economic implications associated with the cryptocurrency sector. This effort is motivated by concerns regarding the lack of transparency and potential risks to financial stability, as exemplified by notable incidents within the cryptocurrency space, such as the Terra ecosystem's collapse in 2022.
Project Atlas combines off-chain data collected from cryptocurrency exchanges with on-chain data sourced from public blockchains through nodes. In its initial implementation, Project Atlas traced the movement of cryptocurrencies across various geographic locations. This preliminary approach utilises transactions linked to centralised exchanges within the Bitcoin network, using the location of these exchanges as a proxy for cross-border capital flows.
It's worth noting that these flow estimates likely represent a conservative estimate of actual transaction volumes, as determining the precise location of exchanges can be challenging. Keeping that in mind, Project Atlas's initial pilot aims to demonstrate that inter-exchange activity holds significant economic relevance.
In its current form, Project Atlas incorporates a user-friendly interface displaying dashboards that visualise the outcomes of data aggregation and analysis, including on-chain transfers and the global movement of funds.
The PoC is intended to offer an overview of cross-border flows, allowing central banks to assess the economic importance of the cryptocurrency ecosystem across different jurisdictions. This data will facilitate the structural analysis of flows and enable investigations into the impact of price fluctuations, developments within financial markets, and unique national characteristics on cryptocurrency flows.
The project's future development includes the integration of additional data sources and the extraction and analysis of data from Ethereum network nodes and DeFi protocols, reflecting an ongoing commitment to comprehensively understand and monitor the cryptocurrency landscape.
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