The BIS’s Bold Move to Unmask Bitcoin Users

• The Bank for International Settlement has introduced Project Atlas for enhanced crypto surveillance.
• The Project might further fuel the adoption of privacy coins like Monero, ZCash and Dash.

The Bank for International Settlement (BIS) alongside several European banks has released a new crypto surveillance program dubbed “Project Atlas.” Markedly, the initiative which is now in the pilot phase is aimed at gaining appropriate data for full transaction surveillance over international flows of crypto assets. 

Besides the BIS, other banks involved in the project are Eurosystem, De Nederlandsche Bank, and the Deutsche Bundesbank.

For context, Project Atlas is a Proof-of-Concept (PoC) that is designed to retrieve and combine data 

from crypto exchanges with granular data (also known as on-chain data) extracted from public blockchains. Project Atlas is poised to operate a Bitcoin (BTC) node to collect on-chain data after which it takes data from digital assets exchanges and links addresses to specific entities or individuals. 

During its data collection process, only information relevant to central banks’ mandates, from public and proprietary sources are retrieved.

According to the BIS, the initiative also explores the economic importance of crypto assets and Decentralized Finance (DeFi). Moreso, Project Atlas combines on- and off-chain information, creating a layered approach to data vetting and tailored statistics for central banks. The motivation behind the initiative is the lack of reliable data that specifically answers the questions surrounding the evolving market, which has enormous potential but is still layered with risks.

Project Atlas; Good News For Privacy Coins

Ultimately, Project Atlas is aimed at improving data collection methods as well as the development of the platform especially for an industry like the cryptosphere where there is a lot of data spread across protocols, market actors and jurisdictions. With this kind of diversification, reporting data usually proves difficult as it is not regulated or standardized. 

However, the launch of Project Atlas brings another level of innovation that is able to track the flow of cryptocurrencies across different geographical regions.

Cecilia Skingsley, Head of the BIS Innovation Hub categorized Project Atlas as a great example of what the BIS Innovation Hub can achieve. As an agency recognized for its work in the field of economics, finance, and computer engineering, BIS is still developing a new and important public good for central banks globally. Skingsley noted that the data on cross-border flows are useful for areas like payments and macroeconomic analysis as well.

An October 11 report by Swan lead Market Analyst Sam Callahan stated that the solution will be made available for regulators and central banks’ use on a single analytics platform. Notably, the data will be presented in a user-friendly and easily accessible manner.

Let me tell you about a concerning new pilot program launched by the BIS, Eurosystem, De Nederlandsche Bank, and the Deutsche Bundesbank last week – Project Atlas.

Project Atlas is a Proof of Concept for surveilling the international flows of Bitcoin and all crypto-assets.… pic.twitter.com/K4FJsI16EW

— Sam Callahan (@samcallah) October 11, 2023

At the same time, it is worth noting that this initiative tampers with BTC users’ privacy and this may force investors to pivot to other tokens especially those that are privacy-centric. In the long run, tokens like Monero (XMR), ZCash (ZEC), and Dash (DASH) may become alternatives for these investors who do not wish for their crypto transactions to become public business.

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