The Bank for International Settlements (BIS) introduced its crypto project, Project Atlas, in a new study that examines on-chain and off-chain data. The international financial institution, which hosts 63 central banks representing countries from all around the world, believes that Project Atlas can support future crypto regulations.
The Project of the Bank for International Settlements: Project Atlas
The latest publication of the Bank for International Settlements introduces Project Atlas, a decentralized financial data platform. It is believed that Project Atlas can support regulations for the crypto market actors. In the concept proof report published in collaboration with the central banks of the Netherlands and Germany, it was stated that Project Atlas was initially used to map significant off-chain international flows between crypto exchanges.
Cecilia Skingsley, Head of the Innovation Centre at the Bank for International Settlements, said, “We are developing a new and important public good for central banks globally. It relates to cross-border flows, payments, and macroeconomic analysis.”
In the study initially examining transactions on the Bitcoin (BTC) network, it was stated, “Although relatively small compared to the total on-chain network traffic, the identified flows between crypto exchanges are economically significant and substantial. The data provided by Project Atlas can serve as a starting point for preliminary assessments and support the preparation of data reporting requirements and the regulation of actors in the crypto market.”
Central banks are looking to gain better insights into the risks in markets that are often difficult to understand. In this regard, the Bank for International Settlements first introduced the idea of a “crypto market intelligence platform” in June 2022. Recent crises, such as the collapse of the crypto exchange FTX, once again highlighted the importance of developing the project, as unregulated actors operating in opaque markets can lead to the identification of dangers.
70% of Trading Activity on Crypto Exchanges is Misleading
The report published by the Bank for International Settlements, which brings together central banks from around the world, includes a warning that crypto data can be “manipulated or distorted.” The report also includes figures showing that 70% of trading activity on some crypto exchanges is achieved through wash trading, which involves buying and selling the same asset with the aim of misleading and manipulating markets, and is considered illegal.
Due to negative allegations surrounding wash trading in the crypto market, major centralized crypto exchanges such as Binance are trying to alleviate investor concerns by sharing details of the wallets they control. This practice is called Proof of Reserves, and the Bank for International Settlements believes that the Proof of Reserves report can be used to bring new approaches to data-focused supervision in the future.
