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The New York State Department of Financial Services (NYDFS) outlined new requirements for virtual currency business entities in the state on Sept. 18.
According to the Wall Street Journal, the new rules focus largely on cryptocurrency delistings. NYDFS Superintendent Adrienne Harris told the news organization:
“When we know that a coin that someone once thought was OK [is not], [and] when we see that new risks have emerged or the coin is being misused, we want our entities to have a way to delist the coin in a way that’s still protective of consumers and protects safety and soundness as well.”
The NYDFS’ own announcement indicates that the proposed rules expand upon the original guidance first published in 2020. Those rules provide a framework through which crypto firms can create policies for adopting and listing new cryptocurrencies.
Those rules also allow for “greenlisted” cryptocurrencies, meaning companies can list tokens recognized by the NYDFS without creating a policy or seeking prior approval. The agency’s greenlist currently includes Bitcoin (BTC), Ethereum (ETH), and six stablecoins, including PayPal’s recently-announced PayPal Dollar (PYUSD).
Much of the new guidance concerns delisting requirements, as described by Harris. While those regulations allow companies to create their own policies, all companies that list coins are required to create a delisting policy — including those without a listing policy.
The new guidance also includes heightened risk assessment standards for coin-listing policies, plus more significant requirements for retail and consumer products and services. NYDFS is accepting public comment on that proposal until October 20, 2023.
The new rules on greenlisted tokens are effective immediately.
NYDFS imposes strict crypto rules
New York is known for its exceptionally strict cryptocurrency rules. All crypto companies that operate or serve customers in the state must obtain a virtual currency license from the NYDFS in the form of a BitLicense or limited-purpose trust company charter. To date, just 33 companies have obtained some combination of those licenses.
The NYDFS also recently advised companies to segregate corporate and non-corporate crypto assets and announced new supervision charges for crypto companies.
The state also enforces cryptocurrency regulation through another agency, the New York Attorney General’s Office, led by Attorney General Letitia James.