BIS and European Central Banks Develop Crypto and DeFi-Tracking System

It looks like the mass adoption of digital assets continues to push forward. Check out the latest mind-blowing reports about the moves that BIS and the European Central Banks are developing.

Central banks in Europe are teaming up with the Bank of International Settlements (BIS) to establish a tracking system for crypto and decentralized finance (DeFi).

Project Atlas, a data-gathering platform developed in collaboration with the Deutsche Bundesbank and De Nederlandsche Bank, has been introduced by the BIS in a recent publication.

The aim of this project is to reveal the macroeconomic significance of crypto assets and DeFi by combining off-chain and on-chain data to produce innovative statistics and verify existing information.

“Project Atlas aims to close some of the existing data gaps by developing a specialized data platform encompassing various data sources to illuminate the macroeconomic significance of crypto and DeFi.

The proof of concept (PoC) provides insights into cross-border flows. Tailored to the needs of central banks and financial regulators, it fuses data gathered from crypto exchanges (off-chain data) with public blockchain data (on-chain data) gathered via operating a node.

Off-chain data include any data not extracted from the ledgers, such as trades that crypto exchanges settle internally. The benefits of connecting off- and on-chain data lie in creating novel statistics and the vetting of existing ones.”

Project Atlas aims to track and estimate the flow of digital assets across specific geographic locations.

Based on its initial findings, the Project Atlas team has discovered that the flows between crypto exchanges are relatively small when compared to on-chain traffic. However, they are still considered to be economically significant and substantial.

As a first proof of concept, the team has been able to identify crypto asset flows across different geographical locations.

The approach involves using transactions linked to crypto exchanges in the Bitcoin network, as well as the location of those exchanges, to estimate cross-border capital flows.

It should be noted that country locations are not always clear for crypto exchanges, and the attribution data may not be entirely accurate or complete.

Therefore, the estimated flows should be regarded as a lower-bound estimate of the actual size.

Other prominent contributors to this project include the Bank of France and the European Central Bank.