BIS collaborates with the Bank of England to launch Project Pyxtrial, enabling real-time monitoring of tokenized assets and stablecoin reserves.

The Bank for International Settlements (BIS) and the Bank of England have jointly developed a proof-of-concept project called "Project Pyxtrial", aimed at enhancing the real-time monitorability of the reserve backing of stablecoins and tokenized assets through the collection and processing of data. This initiative seeks to improve transparency and oversight of the stablecoin market for regulatory authorities and the public.

Analysis of Project Pyxtrial

Through collaboration with regulatory agencies, technical experts, and digital asset issuers, Pyxtrial serves as a real-time monitoring solution for stablecoin reserves, allowing authorities to abandon cumbersome and time-sensitive data collection methods and achieve the aforementioned applications.

Customizable System Components

The report indicates that the Pyxtrial product system consists of data models, databases, and application programming interfaces (APIs), with processed data provided to regulatory agencies or monitors through customizable monitoring centers.

Real-time Comparison of Issuers and Custodians Data

In terms of operation, Pyxtrial collects data every hour from "stablecoin custodian platform data," "reserve data provided by issuers," "data submitted to law enforcement agencies by companies," and other on-chain and off-chain data for multi-party comparison and real-time error correction.

Modular Design for Reproducibility

It is worth noting that Pyxtrial's system is modular, meaning it can be replicated for other regulatory targets, including tokenized securities or bonds:

The technical components of Pyxtrial are modular, reusable, and can be applied to multiple types of regulatory needs, integrated into existing systems based on specific regulatory requirements, while also having flexibility for future enhancements.

The report states that components such as APIs, integration layers, data models, data storage solutions, and monitoring centers are all variable.

Supported by Project Atlas

Additionally, Pyxtrial will provide usable data through Project Atlas, launched in October last year:

Atlas collects data from cryptocurrency exchanges and public blockchains, among others, and processes it according to the needs of relevant banks.

The Bank for International Settlements introduces a visual data platform to provide comprehensive data and lay a regulatory foundation

Striving to Enhance Monitoring Efficiency and Address Potential Risks

BIS also emphasizes in the statement that this project primarily provides regulatory agencies with almost real-time data on stablecoin liabilities and their reserve assets:

Regulatory agencies can receive more frequent and fully automated reports through PyxTrial, enhancing monitoring process efficiency and responsiveness, helping them take faster action against potential risks.

However, the report also indicates that regulatory units still need a deeper understanding of blockchain technology and regulations, which is also a challenge.

Stablecoin Regulatory Framework Still Needs Clarity

Lastly, BIS admits that Project Pyxtrial is not yet fully ready for launch, and the real world is also not prepared for it, as relevant regulations are still being formulated:

Nevertheless, PyxTrial proves that the asset reserves behind stablecoins can be regulated, and the ultimate implementation of PyxTrial requires regulatory agencies to work with various teams to implement and operate it.

Other BIS Reports: Factors Influencing Exchange Token Trends, Fintech Response to Monetary Policy, Privacy-Oriented Retail CBDC