Atlas is Now on the Map.
Headline: What is Project Atlas as it relates to cryptocurrency?
Body: So, the Atlas, well, it’s synonymous with BIG!! The Atlas Mountains are very large. The Atlas rockets are HUGE! An atlas is often a very oversized book that weighs A LOT!! So, usually, using the reference to Atlas means that the object/item is very large and important to many parties. Should it be surprising to us, then, that many cooperating entities in Europe have a shared cryptocurrency program called Atlas? Certainly, the reach is broad, the entirety of the European Union, and just as certain, the objective is large; To coherently regulate the buying and selling of cryptocurrencies. The question is, how good a job is it doing? Well, let’s take a peek.
What exactly IS Project Atlas?
OK, it is important to note, for the record, that Project Atlas is really just a proof of concept, an economic bench test for future regulation. The Bank of International Settlements and many other entities are working together to make suggestions for regulation of cryptocurrency. (The BIS had the idea for a cryptocurrency overwatch facility way back in June of 2022.) To support the setup of this facility, the BIS wrote a report citing up to70% on some blockchains being due to “wash sales.” (A wash sale is when a person sells a security for a loss, and rebuys a substantially similar security within 30 days.) Wash sale can be used to manufacture paper losses, without a “real” transaction. Do this just a few times with a cryptocurrency, and the potential for price manipulation becomes manifest. For this reason, such an overwatch facility was deemed necessary. The demise of FTX and Terra (Luna) was another factor.
So, what’s next?
Whoa there!!! As large as Project Atlas is,(It does involve at least 3 European countries, cryptocurrency is truly international and involves action from many different nations that aren’t all within Europe. So, I think that Project Atlas might serve to provide encouragement to other jurisdictions to try the same thing and do their own version of Project Atlas. Furthermore, Project Atlas only looked at Bitcoin and further projects should involve a variety of other cryptocurrencies.
Finally, one of the experts consulted to write the articles this is based upon said that the more novel a payment system is (and cryptocurrency is quite novel) the longer it will take to educate people inside that economic ecosystem on how to use that currency. Even within the Bitcoin ecosystem, Project Atlas is proving that there are still many financial personnel who do not understand the concept of cryptocurrency.
The Verdict
The Army has a great slogan, “A Great Place to Start.” I believe that Project Atlas is exactly that. It will give other jurisdictions enough confidence to try their own version of the Project. Each area of the globe has their own banking practices (e.g. the hawala system in the Middle East) and they have to suss out on their own how to reconcile cryptocurrency with their financial traditions.
REFERENCES
BIS Unveils Project Atlas, a Data Platform Mapping Crypto Transfers (coindesk.com)
Big Banks Pilot Sophisticated Crypto Surveillance System in Project Atlas (cryptopotato.com)
Central banks want to look under crypto’s hood — Is this a positive sign? (cointelegraph.com)
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.