ECB Pledges To Step Up Crypto Market Monitoring With More On-Chain Data

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The European Central Bank has said it is preparing to increase its oversight of the cryptocurrency markets, with the help of better on-chain tools and data to monitor the markets.

The central bank made the comments in a report titled “Understanding the crypto-asset phenomenon, its risks and measurement issues,” which described a number of technologies that have already been developed to allow better tracking and monitoring of crypto activity.

Using “high-quality aggregated data,” the bank is hoping to form a more developed picture of the crypto markets, which it says will help shape its approach to risk, as well as broader monetary policy.

The report acknowledges that the data available to the bank leaves “gaps and challenges,” including the likely impact of crypto derivatives and other investment vehicles for financial stability.

Noting that these were currently “contained and manageable,” the report said this could change as institutional investors become more heavily involved in crypto markets.

In the report, the bank said it was challenging to obtain the data it required publicly, suggesting that different reporting methodologies and conventions made it difficult to obtain a fully accurate picture.

“Specifically, it is hard to retrieve public data on segments of the crypto-asset market that remain off the radar of public authorities; some relatively illiquid trading platforms may be affected by wash trading; and there is no consistency in the methodology and conventions used by institutionalized exchanges and commercial data providers.”

The bank also said it was mindful of likely changes to the data landscape, in response to further advances and developments in crypto and blockchain technologies.

“Moreover, new and unexpected data needs may well arise with further advancements in crypto-assets and related innovation.”

The report says the ECB is planning a more granular approach to analyzing crypto markets in future, and will “continue to work on indicators and data by dealing with the complexity and growing challenges encountered in analyzing on-chain and layered protocol transactions.”

The developments show the ECB taking crypto transactions and its role in the wider financial system more seriously, reflecting the trend toward mainstream adoption of cryptocurrencies like bitcoin.