New York’s Department of Financial Services (NYDFS) has issued new framework guidance for cryptocurrency firms operating in the state. The guidance requires regulated crypto companies to submit a firm-specific coin listing policy and seek approval from the regulator before listing or offering custody for a coin, unless it is already on the regulator’s pre-approved “greenlist”. The move is aimed at increasing transparency and ensuring proper due diligence by crypto companies, according to NYDFS. This framework guidance was first introduced in 2020.
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The New York Department of Financial Services (NYDFS) has recently announced a new regulation mandate that requires all cryptocurrency companies in the state to seek prior approval from the department prior to listing any coins.
The regulation, which goes into effect on July 15, 2021, is aimed at protecting investors and further stabilizing the ecosystem within the state. According to the NYDFS, the goal is to ensure that crypto companies “provide comprehensive disclosures to potential investors” so that they can be aware of all the risks associated with the coin listing process.
Under the new rule, companies must first submit a written request to the NYDFS, which must include information about the proposed coins, any risks associated with them, and the steps the company is taking to manage those risks. Once the department determines the coin meets its minimal requirements, it will issue an approval.
The new regulation seeks to create a more transparent and secure environment for cryptocurrency companies to operate in. This should not only benefit the companies, but also the investors who will now have access to much better quality information about the associated risks.
The NYDFS also made clear that this is only a first step towards creating a stronger cryptocurrency ecosystem in the state. It hopes the new regulation will be complemented by other initiatives to help improve transparency in the industry.
The new regulation is the latest in a string of proactive steps the NYDFS is taking to ensure that the crypto ecosystem in the state is both healthy and safe. It remains to be seen how the new rule will be received by the companies in the state, but many are encouraged by the proactive approach of the NYDFS and are hopeful that it will ultimately result in a stronger and more secure platform for crypto companies to operate in.
