By
Godfrey Benjamin
April 26th, 2024
BIS continues to warn that crypto data can be “manipulated or distorted”.
The Bank for International Settlements (BIS) has unveiled a new platform it calls “Project Atlas”. According to the Wednesday announcement, the decentralized finance data platform will play an important role in the future regulation of crypto market participants.
In a joint report with the Dutch and German central banks, BIS confirms that Project Atlas, which is merely a proof-of-concept for now, has been used to track significant off-chain international flows between crypto exchanges.
Speaking about the project, the BIS Innovation Hub Chair, Cecilia Skingsley noted that Atlas will serve central banks globally. She also highlighted the importance of cross-border flow data, especially for areas involving payments and macroeconomic analysis. Part of her statement reads:
“Though relatively small compared with total on-chain network traffic, identified flows between crypto exchanges are significant and substantial economically.”
BIS Reveals Plans to Use Project Atlas to Improve Crypto Markets Regulation
For now, Atlas has only been used to look at transactions on the Bitcoin network, but expectations remain high for the project. Per BIS, its outcome could lay the foundation for preliminary reviews and drafting of data reporting requirements. It could even form the basis upon which the regulation of crypto market participants is formed.
Interestingly, BIS had been pushing for what it called a “cryptocurrency market intelligence platform” since June 2022. At the time, the bank expressed concerns over the fact that many unregulated actors exist in the murky crypto markets. However, in the light of more recent crises such as the collapse of the FTX exchange, BIS’ fears may have been justified.
According to the present report, BIS continues to warn that crypto data can be “manipulated or distorted”. To drive home its point, it claimed that nearly 70% of activity on some exchanges is wash trading. That is, a form of market manipulation where the same traders buy and sell the same assets. They do this just to create a false impression of market activity.
For what it’s worth though, major centralized exchanges such as Binance are striving for transparency. They continue to assuage these concerns by publishing details of the wallets they control. According to BIS, that “could be used for novel approaches to data-driven supervision” in the future.