BIS and European central banks develop crypto tracking system

The Bank for International Settlements (BIS) is working with central banks in Europe to develop a system for analyzing cryptocurrencies and decentralized finance (DeFi).

The banks presented the data collection platform on Oct. 4 under the project name Atlas. It aims to "explore the macroeconomic relevance of cryptoasset markets and DeFi." The project is in the proof of concept phase. The focus is on "improving data collection methodology and platform development."

According to the BIS, Atlas "combines on- and off-chain information, creating a multi-layered approach to data verification and customized statistics for central banks." Specifically: Data collected by "crypto exchanges" as well as more detailed data " extracted from public blockchains" are used for analysis.

The project's report describes how the proof of concept uses transactions between crypto exchanges on the Bitcoin network, as well as the location of these exchanges, as a proxy for cross-border capital flows. Allocation data links on-chain transactions to crypto exchanges, which are then allocated to their geographic location (where possible).

"Atlas enables a variety of use cases. Researchers can structurally analyze microdata, while policymakers can access customized dashboards to gain insights at a glance. I am excited about the potential and future developments of this project," said Burkhard Balz, board member of the Deutsche Bundesbank.