New York State Department of Financial Services (NYDFS) is continuing to lead the charge in developing regulatory frameworks for the digital currency industry.
What their plans are
In the latest development, NYDFS Superintendent, Adrienne A. Harris, has announced that the department has enhanced its ability to detect fraud and other illegal activity among New York State-regulated entities engaged in virtual currency activity through new insider trading and market manipulation risk monitoring tools.
The move is a significant step in the department’s supervision of the virtual currency industry as it continues to transform and mature quickly.
The new enhancements will provide the department with additional capabilities to detect potential insider trading, market manipulation, and front-running activity associated with Department-regulated entities’ and applicants’ exposure or potential exposure to listed virtual currency wallet addresses.
NYDFS has been in close contact with New York State-regulated virtual currency entities in light of recent events in the virtual currency market space.
The NYDFS’s continued efforts to monitor the virtual currency industry reflect its commitment to making data-driven policy decisions and responding proactively to the virtual currency market.
NYDFS continues to use all of its regulatory tools to keep pace with the industry, make data-driven policy decisions, and respond proactively to the virtual currency market.
This approach is demonstrated by the department’s issuance of new guidance to better protect customers in the event of a virtual currency insolvency or similar proceeding.
This guidline builds upon previously issued guidance related to preventing market manipulation and other wrongful activity.
New York’s crypto bill
The NYDFS’s move to enhance its virtual currency monitoring capabilities comes on the heels of a new development in the state’s stance towards cryptocurrencies.
New York State Assembly Bill A523 was introduced, which would allow state agencies to accept cryptocurrency as a form of payment for fines, civil penalties, taxes, fees, and other payments charged by the state.
The bill allows state agencies to enter into agreements with individuals to provide the acceptance of cryptocurrency as a means of payment for various types of fees, including fines, civil penalties, rent, taxes, fees, charges, revenue, financial obligations, or other amounts owed to state agencies.
The bill defines “cryptocurrency” as “any form of digital currency in which encryption techniques are used to regulate the generation of units of currency, including but not limited to, bitcoin, ethereum, litecoin, and bitcoin cash.”
To become law, the bill will need to be passed by the New York Assembly and Senate, as well as signed into law by the state’s Governor, Kathy Hochul.
The recent moves by the NYDFS reflect the growing maturity and transformation of the virtual currency market. They also highlight the importance of regulatory frameworks in supporting the institutional adoption of cryptocurrencies.
The development of a safer environment for those engaged in cryptocurrency activity will be critical in ensuring that cryptocurrencies continue to become more widely adopted.
New York has pledged to employ all of its regulatory instruments to keep up with the cryptocurrency business as it develops, to make policy choices based on data, and to react proactively to the burgeoning cryptocurrency market.