NYDFS ISSUES CRYPTO GUIDANCE FOR CUSTOMER COMPLAINTS

NYDFS has issued guidance concerning how Virtual Currency Entities handle customer complaints.   According to the guidance: •   The guidance applies to all “Virtual Currency Entities” (“VCEs”) •   The guidance applies to individual customers – not institutions •   The guidance requires VCEs to collect relevant data so DFS can assess whether they are resolving customer service requests and complaints … Read more

NYDFS SUPERINTENDENT HARRIS UPDATES WASHINGTON BANKING CONFERENCE

Speaking at the Institute of International Bankers Annual Conference in DC, Superintendent Harris discussed the following: •      CHARACTER AND FITNESS FOR BANKING EXECS: Superintendent Harris responded to “the buzz” about this recent DFS guidance, saying it should be unsurprising that regulated banks would want to screen out personnel in sensitive positions with criminal records, dire financial problems, … Read more

NYDFS ENFORCEMENT ACTION AGAINST GENESIS GLOBAL TRADING — $8 MM PENALTY AND LICENSE SURRENDER

NYDFS penalized Genesis Global Trading, a licensee that served primarily as an OTC trading shop, $8MM for cybersecurity, BSA/AML, and Consumer Protection violations.  Genesis Global has now surrendered its license, apparently after having ceased trading activity some time ago.  According to DFS allegations: •   Genesis Global did not conduct an enterprise-wide risk assessment until 2022, despite … Read more

NYDFS DRAMATICALLY TRIMS GREENLISTED COINS AND ISSUES PROPOSED GUIDANCE ON REVISED COIN LISTING POLICY

In conjunction with its proposed guidance, DFS has significantly trimmed “Greenlisted” coins. It has cut the list to Bitcoin, Ethereum, and several stablecoins. Until recently it had Greenlisted approximately two dozen coins. These changes are part of the Department’s initiative seeking to strengthen DFS oversight of virtual currencies, which include new guidance coin listing and … Read more

NYAG ENTERS $4.3 MILLION SETTLEMENT WITH BITCOIN SELLER AND NYDFS LICENSEE COIN CAFÉ OVER ALLEGATIONS OF FAILURE TO REGISTER AND EXCESSIVE FEES

The New York Attorney General entered into a settlement with BitCoin seller and NYDFS licensee Coin Cafe over allegations of failure to register with the NYAG’s Investor Protection Bureau and charging excessive fees.   According to NYAG allegations in its Assurance of Discontinuance: •    Coin Café — apparently only a seller of only Bitcoin – nonetheless failed … Read more

NYDFS SUPERINTENDENT HARRIS TESTIFIES BEFORE CONGRESS

FROM NYDFS SUPERINTENDENT HARRIS’ PREPARED TESTIMONY BEFORE US SENATE BANKING COMMITTEE ON DFS REFORMS FOLLOWING BANKING CRISIS: “DFS has been monitoring the liquidity of [high risk] institutions on a daily basis, which entails frequent engagements with these institutions, as well as close coordination with our federal counterparts. . . . I directed DFS’s Office of … Read more

NY ATTORNEY GENERAL INTRODUCES SWEEPING CRYPTO LEGISLATION

Here are some quick impressions: •   Provides expansive new authority to the NYAG to regulate and enforce in the crypto market •   Appears to codify the DFS BitLicense, which is now set by regulation •   Sets up competing enforcement regimes and specifically contemplates conflict by requiring the “attorney general and the [DFS] superintendent shall cooperate, coordinate and assist … Read more

NYDFS CYBERSECURITY ENFORCEMENT ACTION AGAINST CRYPTO FIRM BITFLYER

NYDFS issued an enforcement action against bitFlyer USA, Inc., a cryptocurrency exchange, obtaining a $1.2 million penalty. Takeaways from DFS allegations: •   No specific cyber event was involved – enforcement was based on violations identified over two examination cycles •   This suggests cybersecurity is now well integrated into the DFS examination process •   Core violations included the lack … Read more

NYDFS VIRTUAL CURRENCY CHIEF PETER MARTON TESTIFIES BEFORE NY SENATE BANKING COMMITTEE

DFS Virtual Currency Peter Marton testified on April 25 before the New York Senate Banking Committee.   Some takeaways from his testimony: •   Virtual currency division has hired 40 new staff since Jan. 2022, with total reports of 57 •   The application backlogs remains; DFS has granted four BitLicenses in last 15 months •   The application queue remains high, but … Read more

NYDFS ADOPTS REGULATION ON CRYPTO FIRM ASSESSMENTS

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