Central banks combine off-chain data from crypto exchanges

Central banks combine off-chain data from crypto exchanges

Project Atlas has initially been used to map out significant international flows between crypto exchanges, said a proof-of-concept report issued jointly with the Dutch and German central banks.

The project involves combining off-chain data gathered from crypto exchanges with public blockchain data gathered via operating a node, the document said.

Central bankers are looking to gain better understanding of risks in markets that are often hard to grasp. While BIS first proposed the idea of a 'cryptocurrency market intelligence platform' in June 2022, recent crises such as the collapse of the FTX exchange have highlighted the dangers of unregulated actors operating in opaque markets.

The report by BIS, which tracks central banks worldwide, warns that crypto data can be'manipulated or distorted'. As much as 70% of transactions on some exchanges are washed trading, an outlawed activity that involves the same traders buying and selling the same assets in order to mislead and manipulate markets.

Binance, a major centralized exchange, has sought to alleviate investor concerns by published details of the wallets they control, a form ofAssurance known as proof of Reserves that BIS says 'could be used for novel approaches to data-driven supervision' in the future.