The Bank for International Settlements (BIS) has developed a proof of concept for a system that tracks transactions on public and off-chain blockchains, including those involving Bitcoin. In collaboration with the Deutsche Bundesbank, the Banque de France, the European Central Bank, and De Nederlandsche Bank, the BIS has successfully launched Project Atlas. Its goal? To measure the macroeconomic relevance of cryptocurrency markets and decentralized finance (DeFi) protocols.
Project Atlas: Shedding Light on the Crypto Market
According to details released by the BIS Innovation Hub, Project Atlas aims to provide a deeper understanding of the cryptocurrency sector. This is motivated by transparency challenges and potential risks to financial stability, with the collapse of the Terra ecosystem in 2022 cited as an example.
The initial proof of concept for Project Atlas focuses on tracking data from public blockchains and cryptocurrency exchanges. By combining off-chain data from cryptocurrency exchange platforms with information gathered from public blockchain nodes, Project Atlas can map cryptocurrency flows across different geographical regions.
The initial approach uses Bitcoin network transactions related to centralized exchanges, as well as the location of these platforms, as an approximation of cross-border capital flows. Although the precise location of exchanges is difficult to determine, early data suggests that inter-platform exchanges are economically significant.
Towards a Brighter Future
The current version of Project Atlas offers a user interface that displays dashboards illustrating the results of data aggregations and analyses. This project provides central banks with insights into cross-border flows and enables them to assess the economic significance of cryptocurrencies in different jurisdictions.
With the ambition to integrate more data sources, the next step of the project will involve extracting and analyzing data from Ethereum network nodes and DeFi protocols.
