European Central Bank Is Ramping Up Its Crypto Surveillance

The European Central Bank (ECB) is in our latest cryptocurrency news for saying that the “central banking community” will update its monitoring of cryptocurrency transactions (on and off-chain) and apparently “refine” it.

According to a report shared on August 7 and titled “Understanding the crypto-asset phenomenon, its risks and measurement issues,” the ECB argues that “closing the data gaps associated with crypto-assets” is continuing to pose a significant challenge on the regulators and financial institutions alike.

The report which is viral in the altcoin news, also argues that the risks and spillover effects of crypto assets to the real economy depends on the extent that the two spheres are actually interconnected. It therefore advises that the European Central Bank (ECB) should prolong and refine its qualitative as well as quantitative analysis of the new asset class.

However, the public nature of the current distributed ledger technology based crypto asset networks broadly provides transparency, as the report notes. This is why the decentralized and patchily-regulated nature of crypto asset related activities complicates the efforts to organize systematic data collection efforts.
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This is mostly because of the absence of hard transaction data that covers both on- and off-chain activity and results in only a partial view of the crypto asset marketplace.

The report by the European Central Bank also outlines a couple of initiatives that will apparently refine the crypto asset data collection and analysis – which have already been undertaken by entities including the Irving Fisher Committee on Central Banking Statistics and expert groups which are in charge of investigating the statistical classification of crypto assets in the System of National Accounts.

The European Central Bank says that the authorities must contend with “relatively illiquid crypto trading platforms that may be affected by wash trading” and take into account the “lack of consistency in the methodology and conventions used by institutionalised exchanges and commercial data providers.” The report is featured on many best cryptocurrency news sites today.

In the conclusion, the ECB pledges to continue to analyze the world of on-chain and off-chain protocol transactions and focus on harmonizing and enriching the metadata for off-chain transactions – plus developing the best practices for crypto asset indicators.