New York’s financial regulator, the New York State Department of Financial Services (NYDFS), has recently introduced stricter guidelines for cryptocurrency firms listing and delisting digital assets in the state.
The primary aim of these new regulations is to enhance investor protection and mitigate potential risks associated with cryptocurrencies.
Under these new rules, cryptocurrency companies are now required to submit their coin listing and delisting policies for approval by the NYDFS.
These policies will be subject to a comprehensive evaluation based on more rigorous risk assessment standards established by the NYDFS.
The evaluation will encompass various factors, including technological, operational, cybersecurity, market, liquidity, and illicit activity risks associated with the tokens.
These regulations apply to all digital currency businesses operating in New York, including those licensed under the New York Codes, Rules, and Regulation, or limited purpose trust companies governed by the state’s Banking Law.
The NYDFS initially sought public feedback on these proposed regulations in September.
One notable provision in these regulations is that cryptocurrency firms with previously approved coin listing policies are no longer allowed to self-certify tokens unless they obtain approval from the NYDFS.
Prominent cryptocurrency firms like Circle, Gemini, Fidelity, Robinhood, and PayPal are among those obligated to comply with these new rules.
These companies are required to meet with the NYDFS by December 8, 2023, to present their draft coin listing and delisting policies, with final submissions due by January 31, 2024.
Adrienne A. Harris, the Superintendent of Financial Services, emphasized that the NYDFS plans to adopt an “innovative and data-driven approach” to oversee coin listings, delistings, and the broader cryptocurrency market.
She clarified that these regulations are not indicative of a state-wide crackdown on the cryptocurrency industry but rather an effort to ensure that New Yorkers have a well-regulated means of accessing the virtual currency marketplace while positioning New York as a hub for technological innovation and forward-looking regulation.
The NYDFS has been proactive in addressing cryptocurrency-related concerns, expanding its capacity to identify illicit activities such as insider trading and market manipulation within the cryptocurrency space.
With approximately 690 blockchain-based companies headquartered in New York and nearly 19% of New Yorkers owning cryptocurrencies, these regulations are pivotal in creating a safer and more regulated environment for cryptocurrency investors and businesses in the state.