ECB beefs up crypto monitoring for both on- and off-chain transactions

  • The ECB wants to close “the data gaps associated with crypto-assets.”
  • The ECB needs to extend and refine both the qualitative and quantitative analysis of the new asset class.

A report titled “Understanding the crypto-asset phenomenon, its risks and measurement issues,” by the European Central Bank (ECB) details that cryptocurrency transaction surveillance is going to be diversified to include both on and off-chain. This is meant to close “the data gaps associated with crypto-assets.” In addition to that, the ECB believes this will ease the challenges faced by regulators and financial institutions.

The report proposes that the ECB extend and refine both the qualitative and quantitative analysis of the new asset class. Challenges arise where both risks and “spillover effects” into the “real economy” interconnect.

Distributed ledger technologies are known to foster transparency. However, the ECB believes that their decentralized feature alongside the lack of good regulatory frameworks introduce complexities when it comes to systematic data collection. This situation is supported by the lack of concrete data that covers both on- and off-chain crypto activities.

Cointelegraph reports:

“Initiatives to refine crypto asset data collection and analysis have been undertaken by entities such as the Irving Fisher Committee on Central Banking Statistics and expert groups investigating the statistical classification of crypto assets in the System of National Accounts.

The ECB further advises those looking for reliable on and off-chain data to bear the hurdles of getting pubic data from market sections that are currently off-radar. The parties also have to cope with “relatively illiquid crypto trading platforms that may be affected by wash trading” and consider the “lack of consistency in the methodology and conventions used by institutionalised exchanges and commercial data providers.”

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