The Bank for International Settlement (BIS) announced the collaboration with four European central banks to track the global flow of cryptocurrency assets under the project “Atlas.”
The banks, namely the European Central Bank, Banque de France, Deutsche Bundesbank, and Nederkandsche Bank, rolled out a Proof-of-Concept (PoC) to track on-chain and off-chain transactions through Bitcoin.
The purpose of “Project Atlas” is to improve how crypto assets are managed by financial authorities and issuers globally.
According to the report released on the project, it states that:
“To meet the demands of central banks and financial authorities, Atlas offers data-specific information. It combines information gleaned from cryptocurrency exchanges (off-chain data) and information gleaned from nodes on public blockchains (on-chain data). Atlas enables data vetting by integrating diverse sources, offering users tools to more precisely assess the economic importance of these markets.”
The paper points out the rapid expansion of decentralized finance (DeFi) and associated offerings, but regulators have struggled to exercise oversight in this area.
Thus, the lack of regulatory control has led to increased fraud and platform collapse that could have been prevented if officials had access to necessary data.
Per the International Monetary Fund (IMF) and Financial Stability Board (FSB), widespread adoption without adequate regulatory monitoring can undermine government policies.
To get ahead of this issue, Project Atlas is leveraging robust analytical tools to break down large amounts of data that will be distributed throughout the global central banking community.
The Bank of International Settlement (BIS) urges central banks to embrace using custom platforms. According to BIS, the contemporary platform has limited information on trading and is not tailored to the regulator’s needs.
It added that the process for collecting data across various blockchains is often not transparent, which limits central banks’ ability to solidify information across their jurisdiction.