International and EU Banks Seek to Track Cryptocurrency and DeFi Flows

In the world of blockchain, the fundamental principle that has attracted many people is decentralization. However, recent developments in the industry raise important questions about whether this essence is in jeopardy.

A prominent example of this is the recent project led by the Bank for International Settlements (BIS) and several European central banks called “Project Atlas.”

Its stated goal is to track the international flows of cryptocurrencies and decentralized finance (DeFi) protocols. Although it is presented as an effort to better understand these markets and address the lack of transparency, legitimate concerns have arisen about whether this could undermine the fundamental principles of decentralization.

Goals set by “Project Atlas”

According to official documents, the operation of “Project Atlas” is based on comprehensive data collection that encompasses both transactions on blockchains and transactions outside of blockchains. This means that not only public activities, such as transactions recorded on the blockchain, but also private transactions of users would be monitored.

This extensive supervision raises significant concerns regarding individuals’ privacy. Cryptocurrencies have long been seen as a refuge for those who value financial confidentiality and autonomy over their own assets. The project could seriously compromise this privacy, which goes against one of the most valuable principles that have driven the adoption of cryptocurrencies.

“Project Atlas” uses transactions attributed to centralized exchanges on the Bitcoin network as a proxy to evaluate cross-border capital flows. However, this methodology raises legitimate questions about the accuracy of the collected data. The exact location of these exchanges is often difficult to determine, which could lead to erroneous conclusions based on incomplete information.

In a space where decentralization and privacy have been hallmarks, “Project Atlas” represents an attempt at significant change for the ecosystem. While transparency is an important element for the maturity of the crypto market, it is essential to find the balance that does not alter the very essence of decentralization and the privacy of all users.