Recent developments about the New York State Department of Financial Services
(Not affiliated with NYDFS; just a blog.)
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
DFS has ordered Paxos to stop issuing BUSD stablecoin, one of the most widely held and traded. According to DFS: “DFS has ordered Paxos to cease minting Paxos-issued BUSD as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance through Paxos-issued BUSD. In response, on February 13, 2023, Paxos … Read more
NYDFS has adopted a new Community Reinvestment Act regulation. It has been looking at the issue for quite some time. According to DFS the final regulation details how institutions must collect and submit data while abiding by fair lending laws. Banks will be required to report to DFS details of applications, such as: • whether the … Read more
This is what it looks like as digital asset firms reach for normative compliance: Anchorage Digital Bank, a crypto-focused bank, has responded to sharp criticism from the OCC, its regulator, with a series of hires showing real depth in BSA/AML/OFAC compliance. Anchorage Digital, the first digital asset bank to be issued a charter by the … Read more