FameEX Hot Topics | BIS and Bank of England Launch Project Pyxtrial for Stablecoin Monitoring

The Bank for International Settlements (BIS) and the Bank of England have revealed the results of their Project Pyxtrial, aimed at monitoring the reserves of asset-backed stablecoins and tokenized assets. Pyxtrial is described as a proof-of-concept and an “important first step.” The proof-of-concept demonstrated that real-time monitoring of stablecoin reserves can be achieved through cooperation among regulators, technologists, and issuers. However, the system is not entirely ready for full-scale implementation, as both its creators and the regulatory framework it aims to support are still in development.

The solution consists of a data model, database, and application programming interfaces (APIs). Regulators and supervisors would access processed data through a customizable dashboard. The system is not fully automated: “Pyxtrial does not assess asset quality, the rigor of asset valuations, or the quality of the data sources used. Hence […] supervisors may need to play a role in setting out rules or guidance on data quality.”

Pyxtrial is designed to collect data hourly from blockchains and platforms hosting stablecoins, then match it with data from issuers regarding the stablecoins’ backing assets. However, self-declared data from issuers may be insufficient in several ways. Users of Pyxtrial need the authority to specify the required data and the frequency of its submission.

A related initiative, Project Atlas, could supply additional data to Pyxtrial. Project Atlas similarly gathers on-chain data from cryptocurrency exchanges and public blockchains, as well as off-chain data, and processes them for the needs of central banks.

Training users for Pyxtrial poses a challenge, as operators will need extensive knowledge of blockchain technology and regulations. However, Pyxtrial could be adapted to monitor other digital assets, such as tokenized securities or bonds. The authors stated: "Pyxtrial is designed so that its technical components […] are modular, reusable, and can be repurposed. It is intended to be adapted to specific regulatory needs and integrated into existing systems, with the flexibility to be enhanced in the future." The proof-of-concept also highlights the potential for cooperation between regulators and technologists, according to the report.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.