The Bank of International Settlements (BIS) Develops Proof of Concept for Tracking Cryptocurrency Transactions
The Bank of International Settlements (BIS) has collaborated with several central banks including the Deutsche Bundesbank, De Nederlandsche Bank, European Central Bank, and the Bank of France to develop a proof of concept (PoC) called Project Atlas. This PoC aims to track both on-chain and off-chain transactions from cryptocurrency exchanges and public blockchains such as Bitcoin.
Improving Transparency and Understanding the Economic Implications
BIS’s Innovation Hub published details of this concept, which seeks to provide insights, information, and economic implications of the cryptocurrency sector. The goal is to address the lack of transparency in the crypto space and mitigate potential risks to financial stability, especially considering notable failures like the Terra/LUNA algorithmic stablecoin collapse in 2022.
Combining Off-Chain and On-Chain Data
Project Atlas combines off-chain data from cryptocurrency exchanges with on-chain data from public blockchains. Nodes gather this data to track cryptocurrency flows across different geographical locations. By analyzing these transactions, central banks can gain a better understanding of the macroeconomic relevance of cryptocurrency markets and decentralized finance (DeFi) protocols.
Hot Take: Enhancing Regulatory Oversight in the Crypto Space
The development of Project Atlas by BIS and its collaborating central banks marks a significant step toward enhancing regulatory oversight in the crypto space. By tracking both on-chain and off-chain transactions, this proof of concept aims to improve transparency and mitigate potential risks to financial stability. With greater insights into cryptocurrency flows across geographical locations, central banks can assess the macroeconomic relevance of these markets and better understand the implications for decentralized finance. This initiative demonstrates a proactive approach by central banks to ensure the responsible development of the crypto industry.
By
By
By
By
By