According to research conducted for the German financial regulator BaFin, regulators can more effectively combat cybercrime by looking directly at the blockchain. Still, it would require a significant amount of additional work.
Around the world, lawmakers and financial regulators are working to include crypto technology in the regulatory framework. Still, some authorities are beginning to worry about taking on responsibilities that are entirely outside of their expertise.
Web3 proponents contend that, if regulators are trained in their usage, dispersed technologies may actually aid in achieving governmental objectives like tax collection or financial crime prevention. But the research contends that certain adjustments to working procedures could be necessary.
The paper, which was prepared by experts at the University of Innsbruck in Austria and released on Tuesday, stated that “in the field of crypto custody, it is fairly viable to gather and automatically process public ledger data such as blockchain data.” Additionally, processing the material is made simple by its very formulaic structure.
According to the researchers, “even data that is not acquired from the monitored businesses, but rather from public sources, might contribute value for IT supervision,” allowing authorities to identify intrusions before they are reported routinely.
However, it was highlighted that a small team of officials working around the clock is required due to the high resource requirements to maintain and evaluate the information stream. According to the article, BaFin may need to collaborate with other German authorities to handle that type of task, like the finance ministry or the BSI, which is in charge of cybersecurity.
Long responsible for overseeing traditional financial institutions like banks, BaFin has more recently taken under its umbrella cryptocurrency custodians like wallet providers.
The regulator claimed in a statement published on Tuesday that it had already put some of the project’s preliminary findings into practice. The project looked at how digital technology is changing finance more generally, including allowing cutting-edge payment providers to access banking data and the associated risks of data breaches, and the concentration of power in a small number of powerful tech companies.
In an interview that was released on Wednesday, EU bank regulator José Manuel Campa expressed concern that, given the great demand for experts in the industry, he lacked the knowledge necessary to carry out the new responsibilities outlined in the bloc’s Markets in Crypto Assets (MiCA) regulation.
