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 proposals will allow participants to use developing technologies such as distributed ledger technology to undertake the activities traditionally associated with central securities depositories and trading venues. 

The DSS will allow firms to explore the benefits of these new technologies and practices in traditional financial markets.

The Bank and the FCA will pursue three overarching aims: 

• Facilitating innovation to promote a safe, sustainable, and efficient financial system.
• Protecting financial stability, and
• Protecting market integrity and cleanliness.

The DSS lasts for five years and will help regulators "design a permanent technology friendly regime for the securities market."

Deadline for comments is 29 May 2024.

These products would be available for professional investors, such as investment firms and credit institutions authorised or regulated to operate in financial markets only.

In a statement, the FCA said exchanges will need to continue to make sure "sufficient controls are in place, so trading is orderly and proper protection is afforded to professional investors. cETNs must meet all the requirements of the UK Listing Regime, for example on prospectuses and on-going disclosure."

The financial authority explained that with "increased insight and data due to a longer period of trading history, the FCA believes exchanges and professional investors should now be able to better establish whether cETNs meet their risk appetite."  

However, it continues to believe that "cETNs and crypto derivatives are ill-suited for retail consumers due to the harm they pose. As a result, the ban on the sale of cETNs...to retail consumers remains in place." 

See also our article UK: FCA updates position on cryptoasset-backed Exchange Traded Notes

Following public consultation at the OECD, the rules and commentary for both the Cryptoasset Reporting Framework (CARF) and amendments to the Common Reporting Standard (CRS 2.0) have been agreed at the international level to ensure consistency across jurisdictions. However, the package contains optional elements, and the practical implementation is not prescribed in detail. This consultation sets out the details of the rules and invites views on the optional elements and the UK’s proposed implementation of the rules.

The consultation comprises four main sections:

1. Cryptoasset Reporting Framework (CARF) – the government is consulting on the UK implementation of the OECD CARF and the government’s approach to its optional elements. The CARF provides a new framework for automatic exchange of tax-relevant information on transactions in cryptoassets.

2. Common Reporting Standard (CRS) – the government is consulting on the UK implementation of the OECD amendments to the CRS, which update the rules to include new types of assets and improve its operation. It is also seeking views on two potential amendments to regulations.

3. Seeking views on domestic reporting – following on from the ‘The Tax Administration Framework review – information and data’ consultation, the government is seeking views on the potential benefits and drawbacks of extending the CARF/CRS international standards to require UK reporting entities to include information on UK residents.

4. Summary of the consultation questions.

Deadline for comments is 29 May 2024.