logo

New York Financial Regulators share guidance to banks regarding crypto

Crypto

TL;DR Breakdown

  • When it issued its so-called BitLicense in 2014, New York became one of the first states to license cryptocurrency-related activity
  • Banks are all informed that they should give at least 90 days’ notice before starting any crypto activities
  • Banks must provide data in 6 categories

Change is the only constant thing in the universe; if people do not change with change, they will perish. It is a universal law. The traditional way of finance is changing and in the modern day, crypto is leading the race. Many institutions have shared guidelines regarding using this new financial system to protect users.

In a policy statement released Thursday, the New York Department of Financial Services asserted that it would evaluate new cryptocurrency-related activities proposed by banking institutions based on any risks they might pose to the financial institutions and users. The document also outlined the procedure for institutions hoping to get permission to offer cryptocurrency products and services.

NYDFS and their guidelines regarding crypto

When it issued its so-called BitLicense in 2014, New York became one of the first states to license cryptocurrency-related activity. When it established the regulations in June, it claimed it was the first state to implement stringent guidelines for stablecoin reserves and redeemability. Under additional authority given to the agency in April, the state proposed introducing an annual assessment fee for regulated digital companies in December.

The New York Department of Financial Services has different banks across the state. They are all informed that they should give at least 90 days’ notice to the agency before beginning any new or materially different crypto-related operations. It has become among the first state financial regulators to provide such advice to banks.

The guideline includes six conditions for which banks will need to work and provide enough information if they need approval for crypto-based activities. In addition, banks must provide data in 6 categories:

  1. Their financial model
  2. How they aim to manage enterprise-wide risk connected to cryptocurrencies
  3. How they plan to build up their corporate governance framework
  4. How customers will be safeguarded, their financials
  5. Legal and regulatory analyses
  6. The guidelines also offer an additional checklist of the papers the institutions must submit.

Additionally, the statement that accompanied the guideline advised institutions already involved in virtual currency activities to get in touch with their points of contact at the agency right now.

Need for the guidelines

As crypto is evolving day by day and there are so many risks for the users because they might end up losing all their money, as the crypto market saw in the case of the FTX collapse. According to NYDFS Superintendent Adrienne Harris, the guideline is required as the crypto market develops over time and as conventional banking institutions remain innovative.

Additionally, Ms. Harris stated last month that the agency’s application procedure is made to examine intricate businesses, like cryptocurrency exchange FTX, in a personalized way to ensure that they have strong financials and suitable risk controls in fields like anti-money laundering and cybersecurity.

The guideline also comes as additional information concerning FTX’s bankruptcy comes to light. Sam Bankman-Fried, the exchange’s former founder and chief executive, was detained on Monday in the Bahamas after the U.S. filed criminal charges following the exchange’s bankruptcy filing last month.

This week, prosecutors and regulators said that Mr. Bankman-Fried committed one of the largest financial scams in American history by stealing billions of dollars from FTX consumers. They claimed that a significant portion of the funds supported Mr. Bankman-other Fried’s major investment, the trading firm Alameda Research. 

New York Financial Regulators share guidance to banks regarding crypto 1

When the company filed for bankruptcy, according to FTX, it was looking for a license in New York. Last month, an NYDFS official claimed that the organization had never given the cryptocurrency exchange permission to operate in the state.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

Haseeb Shaheen

Haseeb Shaheen

As a Web Researcher and Internet Marketer, Haseeb Shaheen delivers relevant valuable content for audiences. He focuses on financial and crypto market analysis, as well as technology-related areas that help people change their lives.

Related News

Hot Stories

Crypto user behind $116m Mango Markets exploit waives right to bail
What are the Top 15 Crypto Podcasts?
Solana price analysis: SOL drops again after failing at $26 resistance
Most Crypto-friendly Countries for Crypto Traders and Investors
Olympus DAO: All You Need to Know

Follow Us

Industry News

Crypto user behind $116m Mango Markets exploit waives right to bail
Indian retail giant Reliance will be accepting CBDC digital rupee
Coinbase's stock increases after Fed hikes interest rate
A documentary about SBF and CZ’s relationship is in the works
SOL-based lender Everlend Finance shuts down

Add Your Heading Text Here