The New York State Department of Financial Services (NYDFS) has announced new restrictions on Nov. 15 which require crypto companies to submit their coin listing and delisting policies for NYDFS approval. This applies to all digital currency business entities licensed under the New York Codes, Rules and Regulation or limited purpose trust companies under the state’s Banking Law. The submitted policies must pass a stringent risk assessment process, considering technological, operational, cybersecurity, market, liquidity and illicit activity risks of the tokens.
The NYDFS called for public feedback on the proposal in September, and all affected firms must meet with the NYDFS by Dec. 8, 2023, to preview their policies and submit them by Jan. 31, 2024. Companies that already have an approved policy cannot self-certify any tokens until they receive the regulator’s approval.
Superintendent of Financial Services Adrienne A. Harris said the purpose of the rule is to ensure New Yorkers have a well-regulated way to access the virtual currency marketplace and that New York remains at the center of technological innovation and forward-looking regulation. This comes after the NYDFS said it broadened its ability to identify cryptocurrency-related illicit activities, such as insider trading and market manipulation, in February.
Some of the firms that must comply with the new rules are stablecoin issuer Circle, crypto exchange Gemini, fund manager Fidelity, trading house Robinhood and payments giant PayPal. About 690 blockchain-based companies are based in New York, while 19% of New Yorkers own cryptocurrency, according to an August report by Coinbase.