The New York State Department of Financial Services (NYDFS) is introducing proposed guidance aimed at enhancing transparency in the cryptocurrency industry within the state. The guidance, set to be released on Monday, outlines the NYDFS’s expectations for cryptocurrency companies when it comes to evaluating coin offerings before listing and provides criteria for delisting coins. The intention behind this framework is to assist firms in creating their own coin listing and delisting policies.
Adrienne Harris, Superintendent of NYDFS, emphasized the need for stronger standards surrounding coin offerings and noted that these updates address deficiencies discovered during examinations. She highlighted that this new guidance includes specific provisions for delisting, which was not present in previous guidelines.
Harris explained, “When we know that a coin that someone once thought was OK, when we see that new risks have emerged or the coin is being misused, we want our entities to have a way to delist the coin in a way that’s still protective of consumers and protects safety and soundness as well.”
As part of this proposal, NYDFS is requiring virtual currency companies registered in New York to submit their own coin-listing and delisting policies. The public has until October 20th to provide comments on this proposed legislation.
The original framework, issued in 2020, mandated that crypto companies regulated by NYDFS submit a firm-specific coin listing policy and seek the regulator’s approval before listing or offering custody for a coin unless it was already approved by the regulator. This policy had to align with the company’s business model, operations, and customer base.
Once a firm received approval for its coin-listing policy, it could self-certify a listing but still had to inform NYDFS before using a coin and keep the regulator updated about all coins in use.
The newly proposed framework requires crypto firms to structure their coin-listing policy around three core areas: governance for the coin-listing process, risk assessments of coins, and procedures for monitoring coins.
Regarding delisting, the framework insists that firms outline their decision-making processes, including the circumstances that might trigger a delisting and execution plans, such as providing customers with advance notice and conducting impact analyses.
These proposed frameworks align with NYDFS’s goal, under Harris’s leadership, to establish New York as a pioneering state in regulating cryptocurrencies. During her tenure, the NYDFS has imposed $132 million in fines on cryptocurrency companies, including prominent platforms like Coinbase and Robinhood’s crypto unit. The agency has also overseen significant developments, such as the closure of Signature Bank due to crypto market instability. As of now, the NYDFS’s crypto unit has nearly tripled in size, boasting about 60 staff members compared to just two years ago.
FAQs related to Crypto Crackdown: New York Proposes Tougher Regulations on Cryptocurrency Listings and Delistings
What is the purpose of the proposed guidance from NYDFS?
The proposed guidance is aimed at increasing transparency and setting standards for cryptocurrency listings and delistings in New York.
What does the guidance cover?
It covers the expectations for cryptocurrency firms when evaluating coin offerings for listing and provides criteria for delisting coins. It also requires firms to draft their own coin listing and delisting policies.
Why is NYDFS focusing on delisting criteria?
The guidance includes provisions for delisting to ensure that cryptocurrency companies can remove coins that pose new risks or are being misused, all while protecting consumers and maintaining safety.
What is the deadline for public comments on this proposal?
The public has until October 20th to provide comments on the proposed legislation.
How has NYDFS been involved in cryptocurrency regulation under Adrienne Harris’s leadership?
NYDFS, under Harris’s leadership, has imposed significant fines on cryptocurrency companies, overseen the closure of banks involved in digital asset banking, and expanded its crypto unit to nearly triple its previous size.
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