New York financial watchdog enhances crypto listing, delisting rules
Adrienne A. Harris, Superintendent of the New York State Department of Financial Services, has released revised guidelines for cryptocurrency listing and delisting policies. The measures, which were announced on Wednesday, introduce improved risk assessment norms to ensure a safe and transparent environment for cryptocurrency investors.
To increase scrutiny, the NYDFS will evaluate companies’ policies based on a variety of risk factors, such as technological risks, operational vulnerabilities, cybersecurity threats, market risks, liquidity challenges, and potential illicit activity. This multifaceted assessment aims to provide a comprehensive picture of the risks related to the tokens listed via digital currency business entities.
The upcoming amendments to the state’s Banking Law will apply to limited-purpose trust organizations along with digital currency businesses licensed under the New York Codes, Rules, and Regulations. The NYDFS first invited public comment on such regulatory proposals in the month of September.
As a result of the new regulations, cryptocurrency companies that already have authorized coin listing policies are no longer permitted to self-certify any tokens. Instead, they must apply for approval under the more stringent risk assessment standards of the NYDFS.
Stablecoin issuer Circle, cryptocurrency exchange Gemini, fund manager Fidelity, trading platform Robinhood, and payments giant PayPal are among those which are required to comply with the updated regulations.
In order to comply with the new guidelines, impacted businesses must submit to the NYDFS their draft coin listing and delisting policies by December 8, 2023. The finalized policies are required to be officially submitted by January 31, 2024, establishing a timetable for businesses to adapt to the changing regulatory scenery.
The new guidelines, according to NYDFS Superintendent Adrienne A. Harris, will be enforced through an “innovative and data-driven approach” that will closely monitor coin listings, delistings, and market overall dynamics. Harris clarified that this is not a state-wide crackdown on the cryptocurrency market, but rather a program to promote responsible behavior.
New York’s blockchain involvement
With approximately 690 such entities, New York remains a vital hub for blockchain-based companies. For quite some time, crypto firms have been constantly in the sights of the government.
The NYDFS directed Paxos to stop issuing Binance USD [BUSD], a well-known stablecoin affiliated with Binance [BNB], in February.
The SEC also informed Paxos that the agency was considering recommending an action alleging that BUSD is an unregistered security. Regardless of the regulatory haze, the general public appears to be interested in cryptocurrency. In an August report, Coinbase highlighted various crypto adoption milestones in New York.
It was discovered that 19% of New York residents own cryptocurrency. Furthermore, one-third of New Yorkers accepted that cryptocurrency makes the financial system more equitable. They also called it a “worthwhile investment for the future.” New York is home to over 800 blockchain organization founders.
The recent update by the New York State Department of Financial Services (NYDFS) regarding cryptocurrency listing and delisting policies represents a commendable stride in responsibly overseeing the crypto market. Adhering to these guidelines is crucial for fostering investor protection and establishing industry credibility. Cryptocurrency firms are encouraged to promptly submit their draft policies to the NYDFS for review and approval, aligning with these standards. This proactive approach not only ensures compliance but also enhances transparency and trust within the evolving cryptocurrency landscape.