On Monday, the New York Department of Financial Services (NYDFS) released updated standards for its virtual currency oversight, removing Ripple (XRP) from its approved list of cryptocurrencies. The new list is called the “Greenlist” and only eight cryptocurrencies met the NYDFS’s stringent criteria, including Bitcoin, Ether, the new PayPal Dollar, and five stablecoins. Consequently, tokens such as Ripple, Dogecoin, and Litecoin were taken off the list.
The standards set clear guidelines for all licensed crypto firms regarding listing various cryptocurrencies. They will be applicable to all digital firms operating under NYDFS licensing, including those running cryptocurrency exchanges and wallets. Any firm or token not on the approved list must submit an application to the NYDFS for cryptocurrency listing, with each one subject to individual evaluation.
The NYDFS is renowned for its rigorous oversight of virtual currencies in the United States, mainly through its BitLicense program and virtual currency unit. Although the industry often criticizes the NYDFS for its slow licensing process, the new guidance on cryptocurrency listing shows the agency’s prudent approach to crypto regulation.
Previously, firms licensed by BitLicense and the virtual currency program could gain approval for custody and listing of tokens through a self-certification system. However, under the new guidance, firms must submit a comprehensive application for listing a new cryptocurrency. This application must include information on the cryptocurrency’s security, stability, liquidity, and compliance with relevant laws and regulations. The DFS will assess the application and may ask for more information before taking a decision. The firm can list the cryptocurrency on its platform if the application is approved.
Popular Ripple attorney John E. Deaton commented on the NYDFS’s new guidance on cryptocurrency listing while removing XRP from its Greenlist, saying that: “After it was determined NOT to be a security, it’s not even a security if Ripple sells it on exchanges. Yeah, this move isn’t political or punitive in nature.”
This refers to a ruling made by Judge Analisa Torres in July 2023, where she affirmed that secondary sales of XRP don’t fall under the category of investment contracts. This implies that, according to US law, XRP isn’t classified as a security.
While the NYDFS’s new guidance mandates detailed applications for listing new cryptocurrencies, it doesn’t state whether this applies to XRP. Deaton believes the NYDFS cannot single out XRP, particularly in light of its established non-security status, and that an appeal from the SEC is unlikely to reverse it.
