The NYDFS is introducing enhanced guidelines for crypto firms on coin listings and delistings to ensure transparency and consumer protection.

New York’s leading financial authority, the New York State Department of Financial Services (NYDFS), plans to publish guidance demanding higher transparency from state-regulated cryptocurrency firms. This move aims to clarify how these firms decide to list or delist cryptocurrencies.

Introducing the Updated Framework

Based on an earlier version of their framework, NYDFS has laid out detailed expectations on how crypto businesses should assess a cryptocurrency before listing it. Similarly, the agency outlines the critical steps and benchmarks that these firms need to consider when deciding to remove a digital coin. This new guidance will help crypto companies draft personalized coin listing and delisting strategies tailored to their unique business models.

Adrienne Harris, the Superintendent of NYDFS, highlighted the necessity of these guidelines. She believes these standards will strengthen coin offering processes and address gaps identified in prior assessments. Harris stressed the importance of having a structured method for delisting coins, especially when new risks surface or if there’s evidence of misuse. The primary goal remains to safeguard consumers while ensuring the overall safety and stability of the crypto sector.

As a part of this updated initiative, the NYDFS has called upon all cryptocurrency firms registered in New York to provide their new coin-listing and delisting policies. Interested parties can comment on this proposal until October 20th.

Understanding the Original 2020 Guidance

In 2020, the NYDFS issued its original framework. This demanded regulated crypto entities to submit their specific coin listing policies. Before introducing or offering custody for any digital coin, companies had to obtain regulatory approval unless the coin was part of an already approved “greenlist.” Each listing policy should consider the firm’s business model, operational nuances, and customer base.

Upon receiving the regulator’s nod for their coin-listing policy, companies could self-certify listings. This means they could vouch that a coin aligns with their set standards without any further approval from NYDFS. However, these firms still needed to notify the NYDFS before engaging with a new coin and had to keep them updated on every coin they dealt with.

Exploring the Latest Framework Enhancements

The revamped framework centers around three key areas for firms to draft their coin-listing policy:

Governance of the coin-listing process: Companies need to establish a robust governing structure overseeing the entire coin-listing mechanism.

Risk assessments: Before listing a coin, businesses must carry out comprehensive risk assessments, ensuring the coin’s viability and reliability.

Ongoing monitoring: Continuous monitoring procedures are crucial to keep a tab on the coins’ performance, ensuring they meet the set benchmarks.

On the delisting front, the NYDFS wants firms to be explicit about their delisting decisions. This involves detailing potential triggers for removal and having a systematic execution strategy. It includes informing customers well in advance and conducting an impact analysis to gauge potential repercussions.

NYDFS’s Leading Role in Crypto Regulation

Harris, marking her second year as NYDFS’s head, has been instrumental in leveraging New York’s prominence in regulating the banking and insurance sectors to steer the national regulatory trajectory for cryptocurrencies.

Under her leadership, the NYDFS has imposed fines totaling $132 million on crypto entities. Notable companies include the likes of Coinbase and Robinhood’s cryptocurrency division. March witnessed the NYDFS overseeing the shutdown of Signature Bank amidst a tumultuous crypto market. The bank held nearly $4 billion in deposits linked to its digital asset banking operations.

Harris reiterates the NYDFS’s unwavering commitment to supervising risk assessments of crypto entities. The focus remains on ensuring timely remediation and taking strict enforcement measures when needed. A testament to their dedication is the expansion of their crypto unit. In two years, the staff size has almost tripled, now boasting around 60 members.

The post NYDFS Updates Crypto Listing and Delisting Standards appeared first on Crypto Academy.

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Filed under: Bitcoin - @ September 19, 2023 1:19 pm