Bank for International Settlements launches Project Atlas

Bank for International Settlements launches Project Atlas

In collaboration with central banks within the Eurosystem, the Bank for International Settlements has announced the launch of Project Atlas, a proof of concept aimed at exploring the economic impact of crypto assets and decentralized finance.

The project Atlas, a collaboration of the BIS Innovation Hub Eurosystem Centre, De Nederlandsche Bank, and Deutsche Bundesbank, seeks to streamline the data collection process from various crypto exchanges and public blockchains. The project aims to gather both on and off-chain data, standardize data collection and monitoring methods, and assess results against macroeconomic analysis.

The project's primary focus is on improving data collection and platform development, as current data on the crypto industry is scattered across multiple protocols, market players, jurisdictions, with reporting often unregulated or non-standardized. The project report suggests that Atlas relies on transactions between crypto exchanges in the Bitcoin network and their geographical locations as a proxy for cross-border capital flows.

The BIS's initiative to explore the importance of crypto assets and DeFi is part of a larger trend of central banks and financial institutions taking steps to understand and regulate the rapidly expanding industry.

The BIS emphasised the importance of legal clarification in central bank digital currency development. BIS general manager Agustn Carstens said that almost 80% of central banks lack the legal authority to issue a digital currency under their current regulations or face unclear legal parameters.

The BIS's examination of the crypto industry and Project Atlas is a significant step toward gaining a greater comprehension of this emerging industry. The effort encompasses the ongoing evolution of CBDCs and a continued debate in the crypto community about the potential and dangers of DeFi.

The BIS and other global financial institutions have been working together to understand and possibly regulate the technology with the help of Project Atlas, the latest effort by the BIS.