New York Financial Regulators Issue Crypto Guidance To Banks

Spread the love


New York condition The Department of Financial Services (DFS) has issued guidance to regulated banks wishing to engage in activities related to cryptocurrencies. The DFS has provided these banks with a checklist of submission requirements for state regulators seeking to conduct businesses in crypto.

The guidance, effective immediately, states the application process and “summarizes the types of information the department considers relevant” to obtaining agency approval.

This guidance document consists of 11-pages that format the information through bullet points and reflect the information requirements for various categories such as “Business Plan” and “Consumer Protection” along with other formal checklists.

The directive includes the urgent need to pass regulations to better and effectively govern the sector. Many organizations have issued new guidelines on how to oversee the industry to protect users. The checklist emphasized that its goal is to evaluate new crypto-related activities proposed by banks in terms of the risks and threats they pose to the traditional financial institution.

Details about crypto guidelines

This clarification guide urges regulated banks to submit a business plan to the regulator at least 90 days in advance. However, the document said the approval of the earlier measures “does not constitute general approval”. Certain other activities of third-party service providers may fall under the radar and require agency approval.

Additionally, companies already involved in cryptocurrency operations have been directed to comply with the guidelines and immediately synchronize with their respective contact points at the agency.

DFS Superintendent Adrian A. Harris said in the guidelines:

It is critical that regulators communicate in a timely, transparent manner about the evolution of our regulatory approach.

The checklist primarily consists of six conditions that banks must act on and provide sufficient information if approval is required for virtual asset-based operations. Banks are required to provide data in these six categories:

  • A financial model of crypto-based activity
  • The ways they plan to manage enterprise-wide risks linked to the digital asset sector
  • Details on creating a corporate governance structure
  • Schemes to protect investors and their money
  • Legal and regulatory analysis
  • Additional list of documents to be submitted before the companies start functioning

Could this move crush the industry?

In recent times, New York has been tough on regulating the industry. It has drawn disapproval from New York City Mayor Eric Adams and others. They feel that rigid policies can stifle innovation and growth in the economy. Superintendent Harris opposed the idea because he believed regulation would be valuable to the growth of the economy.


Bitcoin was priced at $17,040 on the one-day chart | Source: BTCUSD on TradingView

New York was one of the first states to issue licenses for crypto-related activities. It allowed a license called the BitLicense in 2014. It introduced regulations in June this year, claiming it was one of the first states to implement strict guidelines to regulate stablecoin holdings and redemptions.


Source link

Leave a Comment