Recent developments about the New York State Department of Financial Services
(Not affiliated with NYDFS; just a blog.)
Matthew L. Levine NYDFS Superintendent Adrienne A. Harris spoke to the Times Union newspaper about the regulatory reach of the agency and challenges in staffing: “[Harris] spent the first six months on the job conducting a staff analysis, prompting her to conclude that the agency is understaffed, especially considering its regulatory reach.” More on the interview in the … Read more
Law360 reports that NASDAQ will be jumping into the crypto custody business for institutional investors. NYDFS will be reviewing their application, according to Law360. Coindesk reporting on this may be found here: https://www.coindesk.com/business/2022/09/20/nasdaq-starts-crypto-custody-services-for-institutional-clients/
Deputy Attorney General Lisa Monaco announced needed reforms and important updates to corporate criminal enforcement policies including for monitorships. New guidance will seek transparency and consistency in how to identify, select and oversee monitors. Documented selection process and program will be oriented to tailor work plans to identified deficiencies. Aim is to keep Monitorship on … Read more
As the Eth merge occurred, NYDFS issued guidance about this token: “With Ethereum’s protocol change complete, #NYDFS continues to recognize Ether (ETH) under our Greenlisted Coins/Tokens List.” The guidance may be found here on Twitter: https://twitter.com/NYDFS/status/1570430059000856577?s=20&t=mE8Rl2KoyZDyjnsO0Kclag
The scope of NYDFS jurisdiction is an oft-debated issue for regulated and non-regulated entities alike. To better understand how NYDFS views its jurisdiction and mission, its worth re-reading these findings from its Consent Order against Robinhood Crypto. “[I]t is worth beginning with the Department’s observation that RHC’s overall approach to its compliance obligations substantially contributed … Read more
Crains New York, a business journal, held a panel on the future of crypto in New York: “As yet, it is unclear if New York’s brand of oversight will attract crypto companies or send them elsewhere to set up shop. ‘It depends whether they recognize how valuable a seal of approval from New York state … Read more
NYDFS took an enforcement action against another insurance company, this time John Hancock Life Insurance Company. According to NYDFS findings, John Hancock prematurely terminated 156 NYS Partnership long term care policies prior to insureds exhausting benefits to which they were entitled, and miscalculated lifetime maximum benefits in cases when insureds used less than the maximum … Read more
According to a CFPB Circular, the CFPB seeks to further muscle into the cybersecurity enforcement space, and it encourages State AG’s to do so as well, saying: “Specifically, financial companies are at risk of violating the Consumer Financial Protection Act if they fail to have adequate measures to protect against data security incidents.” State AG’s … Read more
NYDFS issued what it called a “Pre-Proposed Outreach” for Proposed Amendments to Its Cybersecurity Regulation. The changes are significant and in some sense more prescriptive. Comments are due August 8; to be followed by the actual proposed rulemaking under the state Administrative Procedure Act and a 60-day comment period. The NYDFS Pre-Proposal is available here: … Read more
NYDFS has issued its first enforcement action against one of its regulated cryptocurrency entities. Enforcement takeaways: $30 million penalty is significant. Alleged violations include BSA/AML; Cybersecurity; Reporting; and Consumer Protection. The Department alleged adequate resources were not devoted to RHC’s compliance programs, particularly as it grew, which exacerbated compliance issues. Robinhood improperly certified compliance with … Read more