Bank for International Settlements presents a system for monitoring the supply of stablecoins

What’s new? The Bank for International Settlements (BIS), jointly with the Bank of England (BoE), has tested a system for monitoring stablecoin reserves. As the creators note, the system, called Pyxtrial, is not yet fully ready for launch, but the world is also not ready for it, as many jurisdictions have not yet finalized the stablecoin regulations that the system is designed to enforce.

Press release

What else is known? Pyxtrial includes a data model, databases, and API interfaces. The data processed in the system will be available to regulators through a dashboard that can be customized to suit their needs.

The system collects hourly data from blockchains and exchanges where stablecoins are available and then compares it with the issuers’ own information on reserves.

However, the system is not fully automated: it does not assess the quality of the assets used as collateral for stablecoins, as well as the accuracy of their valuation and the quality of the data sources used. In this regard, officials will have to develop their own recommendations regarding the quality of such data, the creators note. In particular, regulators will need to establish what data, and with what frequency, should be supplied by stablecoin issuers.

The creators also note that using Pyxtrial will require extensive knowledge of both blockchain technology and regulations.

Work on Pyxtrial began in February last year. At the time, the BIS noted that most central banks do not have the tools to systematically monitor stablecoins and prevent asset-liability mismatches.

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Furthermore, Pyxtrial can be used for more than just monitoring stablecoin reserves: its technical components are modular and can be rebuilt to assess reserves of tokenized real-world assets (RWAs) such as securities.

Pyxtrial can also be used in conjunction with Project Atlas, which collects on-chain and off-chain data from crypto exchanges and open blockchains and then processes it for the needs of central banks. Project Atlas is also being developed by BIS and is designed for cryptocurrencies and the decentralized finance (DeFi) sector.