Bank of France (representing the Eurosystem), Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England and the Federal Reserve Bank of New York will seek to work in partnership with a large group of private financial firms convened by the Institute of International Finance (IIF). 

Project Agorá builds on the unified ledger concept proposed by the BIS and will investigate how tokenised commercial bank deposits can be "seamlessly integrated with tokenised wholesale central bank money in a public-private programmable core financial platform."

According to BIS, this could "enhance the functioning of the monetary system and provide new solutions using smart contracts and programmability, while maintaining its two-tier structure." 

The BIS will issue a call for expressions of interest to private financial institutions to join Project Agorá. 

The purpose of the Guidance, which applies to virtual currency entities (VCE) that act as custodians, is to emphasize "sound custody and disclosure practices to better protect customers in the event of an insolvency or similar proceeding".

In issuing the Guidance, the New York State Department of Financial Services emphasized the "paramount importance of equitable and beneficial interest always remaining with the customer".

The Guidance focuses on customer protection relating to:

• segregation of and separate accounting for customer virtual currency;
• VCE custodian’s limited interest in and use of customer virtual currency;
• sub-custody arrangements; and 
• customer disclosure.

The Guidance is applicable to all New York regulated banking organizations, as well as branches and agencies of foreign banking organizations licensed by the Department (“Covered Institutions”).

Covered institutions are reminded of the current requirement to seek prior approval before commencing virtual currency-related activity, including where any portion of those activities will be conducted by a third party. 

The Guidance outlines six broad categories of information that DFS will consider in assessing a covered institution’s proposal: business plan; risk management; corporate governance and oversight; consumer protection; financials; and legal and regulatory analysis.

The Guidance also includes a supplemental checklist of initial documents and information that a covered institution should provide for DFS to consider in its assessment.

The changes include:  

• the creation of three tiers of companies, further tailoring the regulation to a diverse set of businesses with different defensive needs. Furthermore, based on feedback from the industry and in recognition of the realities of operating a small business, the proposed amendment increases the size threshold of smaller companies that are exempt from many parts of the regulation;    
• enhanced governance requirements, thereby increasing accountability for cybersecurity at the Board and C-Suite levels;   
• additional controls to prevent initial unauthorised access to technology systems and to prevent or mitigate the spread of an attack;   
• requiring more regular risk and vulnerability assessments, as well as more robust incident response, business continuity and disaster recovery planning; and   
• directing companies to invest in regular training and cybersecurity awareness programs that are relevant to their business model and personnel.   

"With cyber-attacks on the rise, it is critical that our regulation keeps pace with new threats and technology purpose-built to steal data or inflict harm,” said DFS Superintendent Adrienne A. Harris. “Cyber criminals go after all types of companies, big and small, across industries, which is why all of our regulated entities must comply with these standards – whether a bank, virtual currency company, or a health insurance company.” 

The proposed amended regulation is subject to a 60-day comment period, which ends on 9 January 2023.