BIS, EU central banks building data platform to track crypto, DeFi flows
The Bank for International Settlements (BIS) has developed a proof-of-concept (PoC) for a system tracking on-chain and off-chain transactions from cryptocurrency exchanges and public blockchains, including Bitcoin.
Working with the Deutsche Bundesbank, De Nederlandsche Bank, the European Central Bank and the Bank of France, the BIS has announced a successful PoC called Project Atlas to gauge the macroeconomic relevance of cryptocurrency markets and decentralized finance (DeFi) protocols.
The BIS Innovation Hub published details of the concept, which aims to provide insights, information and economic implications of the sector, citing a lack of transparency and potential risks to financial stability characterized by high-profile failings in the crypto-space like the Terra ecosystem collapse in 2022.
The project combines off-chain data from cryptocurrency exchanges with on-chain data from public blockchains gathered by nodes. The first iteration of the proof-of-concept saw Project Atlas tracking cryptocurrency flows across geographical locations.
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The initial approach uses transactions attributed to centralized exchanges in the Bitcoin network, along with the location of those exchanges, as a proxy for cross-border capital flows.
The methodology notes that flows are likely lower-bound estimates of actual transaction volumes, given that the country location of exchanges is not easily discernible. Nevertheless, Project Atlas’s initial pilot indicates that inter-exchange is “significant and substantial economically.”
In its current iteration, Project Atlas features a front end showcasing dashboards that visualize the results of data aggregation and analysis, including on-chain transfers and the global movement of funds.
The PoC is set to provide an overview of cross-border flows and will provide a means for central banks to evaluate the relative economic significance of the cryptocurrency ecosystem across different jurisdictions:
“The data will allow flows to be analyzed structurally and the influence of price shocks, financial market developments and country characteristics on crypto flows to be investigated.”
The project will continue incorporating more data sources to move into the next development phase, and extracting and analyzing data from Ethereum network nodes and DeFi protocols is also in the pipeline.
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Are Rachel Reeves’s fiscal rules quite as iron clad as she insists?
How tough is her armour really? And is there actually scope for some change, some loosening to avoid big tax hikes in the autumn?
We’ve had a bit of clarity early this morning – and that’s a question we discuss on the Politics at Sam and Anne’s podcast today.
Politics Live: Reeves to reform financial regulations
And tens of billions of pounds of borrowing depends on the answer – which still feels intriguingly opaque.
You might think you know what the fiscal rules are. And you might think you know they’re not negotiable.
For instance, the main fiscal rule says that from 2029-30, the government’s day-to-day spending needs to be in surplus – i.e. rely on taxation alone, not borrowing.
And Rachel Reeves has been clear – that’s not going to change, and there’s no disputing this.
But when the government announced its fiscal rules in October, it actually published a 19-page document – a “charter” – alongside this.
And this contains all sorts of notes and caveats. And it’s slightly unclear which are subject to the “iron clad” promise – and which aren’t.
There’s one part of that document coming into focus – with sources telling me that it could get changed.
And it’s this – a little-known buffer built into the rules.
It’s outlined in paragraph 3.6 on page four of the Charter for Budget Responsibility.
This says that from spring 2027, if the OBR forecasts that she still actually has a deficit of up to 0.5% of GDP in three years, she will still be judged to be within the rules.
In other words, if in spring 2027 she’s judged to have missed her fiscal rules by perhaps as much as £15bn, that’s fine.
A change could save the chancellor some headaches. Pic: PA
Now there’s a caveat – this exemption only applies, providing at the following budget the chancellor reduces that deficit back to zero.
But still, it’s potentially helpful wiggle room.
This help – this buffer – for Reeves doesn’t apply today, or for the next couple of years – it only kicks in from the spring of 2027.
But I’m being told by a source that some of this might change and the ability to use this wiggle room could be brought forward to this year. Could she give herself a get out of jail card?
The chancellor could gamble that few people would notice this technical change, and it might avoid politically catastrophic tax hikes – but only if the markets accept it will mean higher borrowing than planned.
But the question is – has Rachel Reeves ruled this out by saying her fiscal rules are iron clad or not?
Or to put it another way… is the whole of the 19-page Charter for Budget Responsibility “iron clad” and untouchable, or just the rules themselves?
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Is Labour plotting a ‘wealth tax’?
And what counts as “rules” and are therefore untouchable, and what could fall outside and could still be changed?
I’ve been pressing the Treasury for a statement.
And this morning, they issued one.
A spokesman said: “The fiscal rules as set out in the Charter for Budget Responsibility are iron clad, and non-negotiable, as are the definition of the rules set out in the document itself.”
So that sounds clear – but what is a definition of the rule? Does it include this 0.5% of GDP buffer zone?
Read more:
Reeves hints at tax rises in autumn
Tough decisions ahead for chancellor
The Treasury does concede that not everything in the charter is untouchable – including the role and remit of the OBR, and the requirements for it to publish a specific list of fiscal metrics.
But does that include that key bit? Which bits can Reeves still tinker with?
I’m still unsure that change has been ruled out.
The Justice Department says two LA Sheriff deputies admitted to helping extort victims, including for a local crypto mogul, while working their private security side hustles.
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