New York Tightens Cryptocurrency Regulations to Shelter Investors
Stricter Protocols Announced by NYDFS
The New York State Department of Financial Services (NYDFS) has recently introduced a set of stringent regulations regarding the listing and delisting of cryptocurrencies within the state. The new rules were unveiled on November 15th and they place a higher level of responsibility on crypto companies regarding their coin listing and delisting policies.
Under the new regulations, these policies will have to meet tighter risk assessment standards designed by the NYDFS. The intention is to better safeguard investors. Variable factors, like the market, liquidity, technological, operational and cybersecurity aspects, along with the risk of illicit activities inherent to tokens, will be incorporated in the overall considerations made by the NYDFS.
The Scope of the Regulatory Changes
The new changes imposed by NYDFS will impact every digital currency business entity that operates under the New York Codes, Rules and Regulations. Limited purpose trust companies under the state’s Banking Law will also be affected by these amendments. The NYDFS originally asked for public input on the proposed rule changes in September.
Several cryptocurrency firms, ones that have already received an approved coin listing policy, are now required to stop self-certifying any tokens until they have received explicit approval from the NYDFS. Companies like stablecoin issuer Circle, crypto exchange Gemini, fund manager Fidelity, trading house Robinhood, and payment service giant PayPal, are among the firms expected to align with the new rules.
All affected firms have been asked to arrange a meeting with the NYDFS on or before December 8th, 2023. The purpose of these meetings is to provide an overview of their draft coin listing and delisting policies, which they have to submit by January 31st, 2024.
Stance of NYDFS Superintendent on the New Guidelines
Adrienne A. Harris, the Superintendent of Financial Services stated that the implementation of these regulations does not symbolize a state-wide crackdown on the cryptocurrency industry. Rather, it aims to introduce an innovative, data-driven approach to the regulations governing coin listings and delistings. Harris emphasized the importance of ensuring that the residents of New York have a well-regulated method of entering the virtual currency market, thereby sustaining New York’s position at the forefront of technological innovation and progressive regulation.
The Impact on the Current Market
In the month of February, NYDFS announced that it has extended its capacity to detect cryptocurrency-related illicit activities including insider trading and market manipulation. According to a recent report by Coinbase, there are approximately 690 blockchain-based companies currently operating in New York. Furthermore, 19% of New Yorkers now own some form of cryptocurrency.