A New Pilot Program Aims to Enhance Crypto Surveillance
The BIS, Eurosystem, De Nederlandsche Bank, and Deutsche Bundesbank have launched a pilot program called Project Atlas. This program aims to provide surveillance over international crypto asset flows by combining data from crypto exchanges with on-chain data. The goal is to create a single analytics platform that regulators and central banks can use for surveillance purposes.
“Project Atlas creates an infrastructure to collect granular and aggregate data relevant to central banks’ mandates, from public and proprietary sources.”
Mapping the World of Decentralized Finance
The BIS released a report titled “Mapping the world of decentralized finance” to outline the details of Project Atlas. The motivation behind this initiative is the lack of reliable and tailored data on rapidly evolving crypto markets. The program will run a Bitcoin node to gather on-chain data and scrape data from exchanges to link addresses to specific entities or individuals.
Surveillance Capabilities and Privacy Concerns
The first proof-of-concept of Project Atlas focuses on modeling cross-border Bitcoin flows between exchanges based on their locations. The data gathering process involves grouping addresses controlled by the same actor, representing flows between actors with multiple addresses, and linking addresses to entities. However, the BIS acknowledges that its surveillance capabilities are limited when it comes to mixing services like CoinJoin.
Central Banks’ Overview of Crypto Flows
Project Atlas aims to provide central banks and regulators with a global overview of Bitcoin and crypto flows. It will offer information about the entities involved, their transactions, and the magnitude and concentration of these flows. Combining this data with central bank-controlled CBDCs would give governments ultimate control over financial flows. As a result, there is a growing need to consider the privacy of personal crypto holdings and develop privacy-enhancing tools to combat increasing surveillance.
Hot Take: Protecting Privacy in an Era of Surveillance
With the launch of Project Atlas, the surveillance capabilities of central banks and regulators are expanding, raising concerns about privacy in the crypto industry. It is crucial for individuals to consider the privacy of their crypto holdings and for the industry to continue developing innovative tools that enhance privacy and counter the growing surveillance state.
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