Major banks are piloting a sophisticated crypto monitoring system in P Cryptocurrency scrgruppen
A new pilot program launched this month by the Bank for International Settlements, Eurosystem, De Nederlandsche Bank and Deutsche Bundesbank aims to give them oversight of international flows of crypto assets.
The Atlas project is a proof of concept that aims to integrate data from cryptocurrency exchanges with on-chain data.
This will be available on a single analytical platform “for use by regulators and central banks to monitor,” Sam Callahan, principal market analyst at Swan, said on October 11.
“Project Atlas is creating an infrastructure to collect accurate and aggregated data relevant to central bank mandates, from public and private sources.”
Cryptocurrency monitoring for big bank
The Bank for International Settlements released details in October a report Titled “Mapping the World of Decentralized Finance.”
This is driven by a lack of reliable, tailored data on these rapidly developing markets, which poses risks but also has potential benefits.
The Atlas project will run a Bitcoin node to collect on-chain data as well as extract data from exchanges to link addresses to specific entities or individuals.
Let me tell you about a worrying new pilot program launched last week by the Bank for International Settlements, Eurosystem, De Nederlandsche Bank, and the German Bundesbank – Project Atlas.
The Atlas project is a proof of concept for monitoring international flows of Bitcoin and all crypto assets. pic.twitter.com/K4FJsI16EW
– Sam Callahan (@samcallah) October 11, 2023
The first proof of concept focuses on modeling cross-border Bitcoin flows between exchanges based on exchange locations.
She said there are three steps to collecting data: collecting addresses controlled by the same actor, building on that by representing flows between actors that control multiple addresses in the network, and linking addresses to the entities they belong to.
In other words, the system can use on-chain data to monitor individuals by combining it with exchange data.
However, the Bank for International Settlements has acknowledged that mixing services like CoinJoin violate its monitoring capabilities.
Privacy is under threat
In short, the Atlas project will provide central banks and regulators with a global overview of Bitcoin and cryptocurrency flows. They will have data on the entities involved, their transactions, size and focus.
Combining this with a central bank-controlled digital currency (CBDC) would give governments ultimate control over financial flows. Callahan concluded that this is a good time to consider the privacy of personal cryptocurrency holdings:
“It has never been more important to consider the privacy of your stack today and the industry continues to innovate and build privacy-enhancing tools to combat the ever-growing surveillance state.”
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