📈 69% of S&P 500 stocks beating the index - a historic record! Pick the best ones with AI.See top stocks

Central bank test lab develops global bitcoin mapping system

Published 04/10/2023, 09:03
Updated 04/10/2023, 09:06
© Reuters. Bitcoins are seen in this illustration picture taken September 27, 2017. REUTERS/Dado Ruvic/Illustration
EUR/USD
-
BTC/USD
-

By Marc Jones

LONDON (Reuters) - A global central bank test lab has designed a prototype bitcoin monitoring system aimed at giving authorities a clearer picture on how, when and where the cryptocurrency is used.

The Bank for International Settlements (BIS) project, codenamed Atlas, began at the Dutch central bank more than five years ago, but its potential value has been underscored over the last 18 months by a series of chaotic collapses across the crypto industry.

Atlas created a "proof of concept" platform that sucks data from both publicly available "on-chain" crypto ledgers as well as harder to source "off-chain" data reported by only some exchanges and users.

That information then provides a rough picture of cryptocurrency activity, although as crypto wallets can be set up anonymously and without the owner specifying location, it is not necessarily precise.

"An initial analysis of data collected by the platform indicates that cross-border flows are substantial in economic terms and unevenly distributed across geographical regions," the BIS said, albeit acknowledging the "uncertainty".

Regulators have become increasingly concerned that the decentralised nature of cryptocurrencies makes them a risk, especially after the collapse last year of widely-used stablecoin pair, Luna and TerraUSD and the FTX plaform.

The BIS' 'innovation hub' prototype produces "dashboards" that show information such as how many bitcoin are being converted into U.S. dollars at certain times in certain parts of the world.

They can also provide an insight into the adoption and relative importance of crypto markets as they rise or fall in popularity.

Cross-border crypto flows are particularly relevant for central banks in the context of cross-border payments, economic analysis and balance of payments statistics, the BIS said.

They may represent a significant part of cross-border transfers for some countries that is hard to quantify because of the current gaps in data.

© Reuters. Bitcoins are seen in this illustration picture taken September 27, 2017. REUTERS/Dado Ruvic/Illustration

"Central banks need to gain first-hand knowledge of crypto and DeFi and the risks and opportunities they present to the financial system," the BIS said.

It added the dashboards would now be made available to a group of "test" central banks to gather feedback and for further development.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.