The central bank test lab created a “proof of concept” platform that draws data from both publicly available “on-chain” crypto ledgers as well as harder to source “off-chain” data reported by only some exchanges and users

A global central bank test lab has designed a prototype bitcoin monitoring system aimed at giving authorities a clearer picture on how, when and where the crypto currency is used.

The Bank for International Settlements (BIS) project, codenamed Atlas, began at the Dutch central bank over five years back, but its potential value has been underlined over the past 18 months by a number of chaotic failures across the crypto industry.

Atlas created a “proof of concept” platform that draws data from both publicly available “on-chain” crypto ledgers as well as harder to source “off-chain” data reported by only some exchanges and users.

That information then provides a rough scenario of crypto currency activity, although as crypto wallets can be set up anonymously and without the owner specifying location, it is not necessarily accurate.

An initial analysis of data collected by the platform suggests that cross-border flows are substantial in economic terms and unevenly distributed across geographical regions, the Bank for International Settlements stated, although admitting the “uncertainty”.

Regulators have become increasingly concerned that the decentralised nature of crypto currencies makes them a risk, particularly after the failure last year of widely-used stablecoin pair, Luna and TerraUSD and the FTX plaform.

The Bank for International Settlements’ ‘innovation hub’ prototype produces “dashboards” that show information like how many bitcoin are being converted into U.S. dollars at specific times in specific parts of the world.

They can also provide an insight into the adoption and relative importance of crypto markets as they gain or decline in popularity.

Cross-border crypto flows are especially relevant for central banks amid the backdrop of cross-border payments, economic analysis and balance of payments statistics, the Bank for International Settlements added.

They may represent a considerable part of cross-border transfers for some countries that is difficult to quantify due to current gaps in data.