A joint effort by the Bank for International Settlements and the Bank of England, the stablecoin has demonstrated its ability to provide real-time data on liabilities and the assets backing them.
Dubbed Pyxtrial, the initiative could be deployed to track other tokenized products backed by real-world assets in an attempt to address a major challenge for financial watchdogs. Report Published on Wednesday.
Pixtrial includes features that allow authorities to pull data directly from issuers' systems to verify on-chain liabilities.
It follows the turmoil of previous years when previously stable coin issuers called into question the validity of reserves they say they have on hand to redeem their tokens.
Many exchanges and issuers have opted for a self-regulated approach, posting their concerns “Confirmation of reserves” Following the collapse of the previous exchange FTX in 2022.
Backup verification refers to a method of ensuring that a trading platform or crypto firm has one-to-one support on behalf of its customers on digital assets held in custody.
Tether Ltd., the world's largest stablecoin issuer by market capitalization, regularly posts confirmations of the stock it claims to have backed. Although the issuer accepts the data available to it, “the data may not reflect the distribution of Tether tokens at the time of evaluation.
Either way, Pixtrial's “modular” and “customizable” approach allows controllers to adapt the technology to a variety of configurations worldwide, according to the report. Flexibility means Pyxtrial can be applied to other digital assets as well.
As a proof of concept, Pyxtrial demonstrated that a rapidly developed technology solution can support regulators to track liabilities and assets in real-time.
This allows authorities to ensure that the stablecoin is always fully supported, addressing the informal and time-bound nature of traditional data collection methods, the report said.
Despite initial success, Pyxtrial requires further testing and refinement before full deployment. Effective implementation and operation will require skilled professionals to support the system's users, the report said.
The project provides insights into building backend solutions that allow authorities to interact with both on-chain and off-chain data.
No time frame has been given for the finished product to emerge from the tech. Reach out to Decrypt to learn more.
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