The European Central Bank (ECB) has published a report in which it envisages monitoring cryptocurrency markets by analysing blockchain data.
Something very similar was decided a few days ago by the US SEC, making it clear that even the large traditional financial institutions are understanding the usefulness of public distributed ledgers on which anyone can freely conduct an analysis of transactions.
The ECB report is entitled “Understanding the crypto-asset phenomenon, its risks and measurement issues” and was written by Maria Teresa Chimienti, Urszula Kochanska and Andrea Pinna with the aim of understanding the potential risks of cryptocurrencies and improving their monitoring.
In addition, the report describes the characteristics of crypto-assets in order to establish a clear definition of the scope of monitoring activities. It is also assumed how and to what extent the data publicly available on the blockchain can satisfy the monitoring requirements.
The ECB states that it has analysed the crypto-asset phenomenon precisely to identify and monitor the potential implications for monetary policy and the stability of the financial system, as well as to determine the risks that these may entail.
However, the ECB also declares that, at present, most of its monitoring activities are carried out using data aggregated by third parties and available on public websites. These sources provide data that is often diverse or incomplete and does not always provide access to the underlying raw information.
In this way, “important gaps remain unaddressed in the current framework, such as data on financial institutions’ exposures“.
These gaps are probably the same as those that led the SEC to decide to set up its own tools for direct blockchain analysis and could eventually lead to a similar decision by the ECB.
For this reason, the ECB is already planning to explore in more detail its crypto-asset analyses by working on various indicators and data to address the complexity and challenges of monitoring blockchain transactions.
The report does not provide concrete details of the ECB’s operational activities with regard to blockchain analysis and monitoring but explicitly confirms that this type of activity is already in place and that they intend to further examine it.
“In the light of the implications they might have for the stability and efficiency of the financial system and the economy, and also for the fulfilment of the Eurosystem’s functions, crypto-assets warrant continuous monitoring. To this end, the ECB has set up a dataset based on high-quality publicly available aggregated data complemented with other data from some commercial sources using API and big data technologies”.
