Big Banks Pilot Sophisticated Crypto Surveillance System in Project Atlas  

A new pilot program launched by the BIS, Eurosystem, De Nederlandsche Bank, and the Deutsche Bundesbank this month aims to give them surveillance over international flows of crypto assets.

Project Atlas is a proof-of-concept that aims to combine data from crypto exchanges with on-chain data.

This will be available on a single analytics platform “for regulators and central banks to use to surveil,” reported Swan lead Market Analyst Sam Callahan on October 11.

“Project Atlas creates an infrastructure to collect granular and aggregate data relevant to central banks’ mandates, from public and proprietary sources.”

Big Bank Crypto Surveillance

The BIS released the details in an October report titled “Mapping the world of decentralized finance.”

Its motivation is the lack of reliable, tailored data on these rapidly evolving markets, which pose risks but also have potential benefits.

Project Atlas will run a Bitcoin node to gather on-chain data in addition to scraping data from exchanges to link addresses to specific entities or individuals.

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

The first proof-of-concept focuses on modeling cross-border Bitcoin flows between exchanges based on exchange locations.

It said there were three steps to the data gathering: grouping addresses that are controlled by the same actor, building on this by representing the flows between actors that control multiple addresses in a network, and linking the addresses to the entities they belong to.

In other words, the system can use on-chain data to surveil individuals by combining it with exchange data.

However, the BIS acknowledged that mixing services such as CoinJoin infringe on its surveillance capabilities.

Privacy Under Threat

In summary, Project Atlas would provide central banks and regulators with a global overview of Bitcoin and crypto flows. They would have data on the entities involved, their transactions, and their magnitude and concentration.

Combining this with a central bank-controlled CBDC would give governments the ultimate control over financial flows. Callahan concluded that it was a good time to consider the privacy of personal crypto holdings:

“It’s never been more important to consider the privacy of your stack today and for the industry to continue to innovate and build privacy-enhancing tools to combat the evergrowing surveillance state.”