In a move to stay abreast of the swiftly evolving digital currency landscape, the New York Department of Financial Services (NYDFS) is initiating the implementation of novel regulations concerning the listing and delisting procedures of cryptocurrencies on trading platforms.
On September 18, the regulatory body issued a series of draft proposals aimed at directing crypto exchanges in the state on various facets including the procedures for listing and delisting digital assets, and the addition of cryptocurrencies to the official “greenlist”.
Citing the necessity for safeguarding investors and staying ahead of emergent trends and pivotal transformations in the dynamic sector, the regulator unveiled these guidelines.
Under the stewardship of Superintendent Adrienne Harris, the NYDFS outlined the milestones attained by the agency since 2015, inclusive of the establishment of public and private safeguards and fostering dialogues with policy architects. Harris emphasized her commitment to aligning the department’s regulatory frameworks and operational efficiency with the rapid advancements within the industry, reinforcing both market and consumer protection.
In order to cultivate a more robust rule-set, the NYDFS is inviting public commentary until October 20, encouraging stakeholders and the general populace to voice their apprehensions and suggestions.
NYDFS Embarks on Proactive Policy Approach
The newly proposed rules encapsulate directives on how exchanges should evaluate risks, curb price manipulations, ensure liquidity, and adhere to comprehensive disclosure mandates.
As stipulated, enterprises must submit their policies regarding the removal of coins to the NYDFS for approval, with self-certification being prohibited until the agency grants authorization.
As per the official communiqué, these regulations are applicable universally, regardless of whether the companies have established criteria for self-certification of coin listings.
Furthermore, in situations where a listed coin manifests increased risk levels — be it through monitoring processes of VC entities, identification of vulnerabilities by the department, or other means — VC entities should possess the capacity to halt support for the said coin in a manner that safeguards customers and the wider public, maintaining safety and operational soundness.
Beyond the realms of asset listing and removal, exchanges are mandated to institute and manage records for periodic assessments, adhering to the DFS’s prescribed record-keeping template.
Entities that lack formal approval from the NYDFS for listing coins can solely enlist assets present in the “greenlist”. In a bid to forestall market disruptions, assets retracted from the greenlist will not be immediately excised from exchanges; rather, the NYDFS intends to collaborate with all trading platforms to understand and implement their delisting strategies before initiating such moves.
Moreover, the proposals encompass directives concerning the governance structures VC entities should employ in decision-making and policy voting processes.
In alignment with the stipulations in 23 NYCRR Part 200, every organization is required to undertake risk assessments encompassing aspects such as Technical Design, Cybersecurity, Operational Hazards, Illicit Finance, and Market Liquidity.
Crafting a Regulated Financial Landscape in New York
Since its inception in 2015, the NYDFS has been a pivotal player in shaping the financial markets of New York, with its cryptocurrency regulations being a testament to its active role.
Cryptocurrency enterprises operating in New York are mandated to secure a BitLicense from the NYDFS, which has granted over 30 such licenses till date, with eToro being the most recent recipient.
The state’s greenlist features prominent digital assets including Bitcoin (BTC), Ethereum (ETH), and a range of stablecoins, with the agency intensifying oversight amongst firms and enforcing penalties.
In a demonstration of its stringent regulatory stance, the NYDFS has levied fines amounting to $132 million against various exchanges over the past two years, marking its inaugural penalties against industry giants like Robinhood and Coinbase.