April 19, 2024
Project Atlas: Mapping Cross-Border Crypto Transactions for Regulatory Insights
Policy & Regulation

Project Atlas: Mapping Cross-Border Crypto Transactions for Regulatory Insights

According to research published by the Bank for International Settlements (BIS) on Wednesday, future regulation of crypto market operators may be supported by a new decentralized financial data platform.

In a proof-of-concept paper released in collaboration with the Dutch and German central banks, it was said that Project Atlas had first been used to map out substantial international transactions between crypto exchanges.

“We are developing a new and important public good for central banks globally,” Cecilia Skingsley, head of the BIS Innovation Hub, stated in a statement. “Data on cross-border flows are relevant for areas like payments and macroeconomic analysis.”

“Though relatively small compared with total on-chain network traffic, identified flows between crypto exchanges are significant and substantial economically,” stated the study, which initially focused on transactions on the Bitcoin network.

“The output of Project Atlas could serve as a starting point for preliminary assessments and inform the drafting of data reporting requirements and the regulation of crypto market actors.” According to the paper, the initiative combines off-chain data obtained from cryptocurrency exchanges with data obtained by running a node on the public blockchain.

Central bankers are attempting to better understand hazards in markets that are sometimes hard to comprehend. Even though BIS originally proposed a “cryptocurrency market intelligence platform” in June 2022, more recent catastrophes, such as the demise of the FTX exchange, have brought to light the perils of unregulated players operating in unregulated markets.

The BIS study, which unites central banks around the world, issues a warning that cryptographic data may be “manipulated or distorted.” It cites statistics that indicate wash trading, an illegal practice in which the same traders purchase and sell the same item to deceive and manipulate markets, may account for upwards of 70% of activity on some exchanges.

With the help of proof of reserves, which the BIS thinks “could be used for novel approaches to data-driven supervision” in the future, major centralized exchanges like Binance have attempted to allay investor fears.

Image: Wallpapers.com

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