Recent developments about the New York State Department of Financial Services
(Not affiliated with NYDFS; just a blog.)
According to Superintendent Harris, NYDFS will issue additional guidance for cryptocurrency firms. Superintendent Harris via Law360: “We’ll have more to say on capitalization,….You’ll hear more from us on consumer protection, disclosures, advertising … [and] complaints, making sure these companies have an easy way for consumers to complain. . . . Harris indicated that the forthcoming … Read more
CHIEF FEDERAL BANKING REGULATOR MICHAEL HSU, THE ACTING COMPTROLLER OF THE CURRENCY, IS “CAREFUL AND CAUTIOUS” ON CRYPTO — Michael Hsu: “Last year, the OCC adopted a “careful and cautious” approach to crypto activities by national banks. This helped mitigate the risk of contagion from crypto to the banking system. Years of reform and rebuilding … Read more
Superintendent Adrienne A. Harris, Peter Marton & Kaitlin Asrow spoke today at The Brookings Institution about FTX, indicating NY residents had limited exposure to the collapse because (a) FTX had not yet been licensed to operate in NY (it had a pending application) and (b) FTX’s own coin, FTT, had not yet been greenlisted by DFS. Video of the interviews is here: https://www.brookings.edu/events/digital-asset-regulation-the-state-perspective/?utm_campaign=events%3a%20economic%20studies&utm_medium=email&utm_content=231476264&utm_source=hs_automation
Are Twitter Users Really the Best Regulator for Crypto? Regarding Crypto.com‘s erroneous transfer of $400 million, the Wall Street Journal Reports: “The transfer of a large chunk of ether, a popular cryptocurrency, took place on Oct. 21, but came to light after Twitter users flagged the transfer as unusual, based on publicly available blockchain transaction … Read more
According to an interview given by NYDFS Superintendent Adrienne A. Harris to the Wall Street Journal, NYDFS will release guidance for regulated banks that interact with customers handling crypto or want to engage in the business themselves. Superintendent Harris to WSJ: “Where some regulators have said, “No, banks, don’t engage in this at all,” we’ve … Read more
FinCEN and OFAC teamed up to issue parallel enforcement actions against crypto exchange Bittrex, Inc. for alleged violations of BSA/AML and OFAC regulations, with penalties of $29 million and $24 million being issues, respectively. Previously in 2019, NYDFS had rejected Bittrex’s application for a license to operate in New York, finding amount other things that … 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/
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