New York announces guidance for coin-listing to fortify DFS oversight of crypto

Rick Steves

The proposed guidance for Coin-listing and the General Framework for Greenlisted Coins builds upon the DFS’s original framework from 2020, providing clarity on DFS expectations regarding coin-listing and delisting policies of DFS-regulated entities.

New York State Department of Financial Services (DFS) Superintendent Adrienne A. Harris has unveiled significant developments in the agency’s ongoing VOLT initiative, aimed at fortifying DFS oversight of virtual currencies.

The initiative, focusing on Vision, Operations, Leadership, and Technology, has not only reshaped agency operations but also influenced virtual currency policy nationally and globally.

Superintendent Harris also published proposed guidance to enhance coin-listing and delisting procedures, along with updates to the framework for designating coins or tokens to the DFS greenlist.

“Since joining DFS, I have made it a priority to ensure the Department’s regulatory and operational capabilities keep pace with industry developments to protect consumers and markets,” said Superintendent Harris. “In less than two years, we’ve built our team to over sixty experienced professionals, created and enhanced consumer and industry safeguards, and engaged with policymakers around the world – including with the U.S. Congress to help ensure there is a federal prudential regulator to supervise the industry.”

 The VOLT Initiative: A Transformational Journey

Under the VOLT initiative, the DFS has recruited more than 60 experts to oversee licensing and enhance supervision, revamped policies and procedures, and extended its assessment authority to support the growth of the virtual currency unit.

To address emerging challenges, DFS issued eight innovative industry regulatory guidelines. These include groundbreaking criteria for USD-backed stablecoins issued by DFS-regulated entities, protection measures in the event of a virtual currency insolvency, and guidance on the use of blockchain analytics tools to prevent and manage financial risks and suspicious activities.

The DFS, under Superintendent Harris’ leadership, also imposed penalties on cryptocurrency firms, totaling over $132 million in the past two years, to ensure compliance with regulatory standards.

Proposed Guidance: Coin-Listing and Greenlist Framework

The proposed guidance for Coin-listing and the General Framework for Greenlisted Coins builds upon the DFS’s original framework from 2020, providing clarity on DFS expectations regarding coin-listing and delisting policies of DFS-regulated entities. These enhancements result from continuous supervision and harmonize best practices across all entities. The published guidance:

  • Raises risk assessment standards for coin-listing policies, particularly for retail consumer-facing businesses.
  • Mandates licensees to formulate and submit coin-delisting policies compliant with the proposed guidance for DFS approval.
  • Updates the DFS Greenlist, a catalog of approved coins and tokens for all licensees to list or custody, and its associated processes.

The virtual currency industry evolves swiftly, and DFS is actively employing its regulatory tools to keep stride with industry dynamics, make data-driven policy choices, and proactively address changes and risks in the virtual currency market. The proposed guidance will remain open for public feedback until October 20, 2023.

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