A new set of guidelines by the New York State Department of Financial Services (NYDFS) was introduced on Nov. 15, aimed at tightening the rules for firms listing and delisting cryptocurrencies in the state. These new rules require crypto companies to submit their coin listing and delisting policies for approval by the NYDFS, with company policies being measured against stringent risk assessment standards. These standards are designed to protect investors and cover a range of factors including technological, operational, cybersecurity, market, liquidity, and illicit activity risks. All digital currency business entities licensed under New York’s banking law will be subject to these new restrictions, as the NYDFS continues its efforts to regulate the cryptocurrency market.
The NYDFS initially proposed these changes in September and sought public feedback on the proposal. The new regulations apply to companies such as stablecoin issuer Circle, crypto exchange Gemini, fund manager Fidelity, trading house Robinhood, and payments giant PayPal. These firms are required to meet with the NYDFS by Dec. 8, 2023, to preview their draft coin listing and delisting policies and submit them by Jan. 31, 2024. Cryptocurrency firms with previously approved coin listing policies are not allowed to self-certify any new tokens until they receive approval from the NYDFS.
Adrienne Harris, the Superintendent of Financial Services, emphasized that the NYDFS’s new approach is not a crackdown on the cryptocurrency industry but rather a way to ensure a well-regulated way for New Yorkers to access the virtual currency marketplace. Harris highlighted the importance of New York remaining at the center of technological innovation and forward-looking regulation. This move comes following NYDFS’s announcement in February about its increased ability to identify cryptocurrency-related illicit activities, such as insider trading and market manipulation.
According to a report by Coinbase, about 690 blockchain-based companies are based in New York, and approximately 19% of New Yorkers own cryptocurrency. The new guidelines represent the NYDFS’s ongoing efforts to oversee coin listings, delistings, and the cryptocurrency market more broadly, implementing an “innovative and data-driven approach” to ensure investor protection and market integrity. These efforts reflect the state’s commitment to remain at the forefront of technological innovation and to provide a secure and regulated environment for the virtual currency marketplace.
The move to implement tighter restrictions on the listing and delisting of cryptocurrencies in New York demonstrates the state’s proactive approach to regulating the growing cryptocurrency market. By setting rigorous risk assessment standards and requiring companies to submit their coin listing and delisting policies for approval, the NYDFS aims to safeguard investors and maintain a well-regulated environment for virtual currency trading. As the cryptocurrency industry continues to evolve, these measures will play a crucial role in ensuring market integrity and investor protection in New York’s virtual currency marketplace.