Recent developments about the New York State Department of Financial Services
(Not affiliated with NYDFS; just a blog.)
Matthew L. Levine Superintendent Harris announced today final adoption of the assessment regulation. Quick takeaways: • The adopted regulation effectuates legislation in the NYS FY23 Budget giving DFS authority to collect supervisory costs from licensed virtual currency businesses, similar to other licensees regulated by DFS. • Says DFS: “As stewards of others’ assets, virtual currency entities play an important role in the … Read more
NYDFS Superintendent Harris has called for “real time” regulation of crypto, according to Axios: “Harris appears to want to tighten the screws on crypto regulation, with what she’s calling: “real-time supervision.” “This idea that regulators should just come in once a year, go through books and interview staff … was fitting maybe for the 20th-century … Read more
At the Chainalysis Links 2023 conference, the WSJ reported that Superintendent Harris stated that the crypto industry must still mature in compliance: “Speaking more broadly about the crypto industry, Ms. Harris said the sector still lacks maturity in its compliance programs even as it has grown in prominence. During many of the NYDFS’s examinations and … Read more
NYDFS penalized payment platform Bitpay for alleged violations of its regulations governing BSA/AML requirements and cybersecurity obligations. Here are some hot takes from DFS’ allegations set forth in its Consent Order: • Bitpay provides a payment platform for merchants wanting to receive Bitcoin payments; • Bitpay conducted only one cybersecurity risk assessment over a 4-year period; • Bitpay … Read more
According to Fortune: “For the eight months—from April 29 to Dec. 27, when Olson joined the company—SVB went without an established chief risk officer, the company’s risk senior leadership held the responsibilities of the role.” Arguably, not a best practice.
According to a new policy memo to be adopted in the U.S. Justice Manual, “[c]onsistent with the Criminal Division’s approach for the past several years, as well as recent Department-wide guidance, any submission or selection of a monitor candidate by either the Company or the Criminal Division should be made in keeping with the Department’s … Read more
In submitting its Objection to the Third Amended Plan of Reorganization of bankrupt crypto firm Voyager, DFS argues that New York account holders of Voyager are disadvantaged in the plan and should be able to obtain their holdings much sooner, and not after acquisition of them by Binance, because “there is no reasonable basis for … Read more
According to Coindesk: “The FTC has commenced an investigation into certain acts and practices of Debtors [Voyager] and Debtors’ employees, directors, and officers, for their deceptive and unfair marketing of cryptocurrency to the public.” The FTC argued that the proposed sale of bankrupt Voyager’s assets might interfere with its investigation. More evidence that proactive regulation … Read more
NYDFS has announced that it has taken steps to increase its ability to detect virtual currency fraud. In a press release, DFS stated: “The new enhancements will provide the Department with additional capabilities to detect potential insider trading, market manipulation, and front-running activity associated with Department-regulated entities’ and applicants’ exposure or potential exposure to listed … Read more
According to Forbes [HERE]: “According to a source familiar with Paxos, the company was not aware that Binance intended to manually port the token [BUSD] onto other blockchains. When these revelations came to light, the DFS held multiple meetings with the company in January. The source said, ‘I can say with absolutely 100% confidence that … Read more