Crypto
New York is demanding crypto companies to enhance their coin listing standards.
The financial regulatory agency of New York wants licensed crypto companies to be more transparent about the coin listing and delisting processes of cryptocurrencies.
According to The Wall Street Journal, the New York Department of Financial Services (NYDFS) has introduced a new legal framework that requires cryptocurrency companies to draft a policy for establishing “coin listing and delisting regulations” in order to enhance the criteria for evaluating a coin on an exchange.
Regarding the “Coin Listing Policy,” NYDFS requires cryptocurrency companies to base their drafting on three factors, including:
1. Governance of the listing process.
2. Risk assessment procedures for the coin.
3. Coin monitoring procedures.
Furthermore, the “Listing Policy” must be continuously adjusted to align with the company’s business model, customer operations, and other relevant factors.
Regarding the “Coin Delisting Policy,” the financial regulatory agency of New York requires companies to provide detailed explanations for their decisions, including:
– Reasons for the delisting.
– Events that led to the delisting.
– Estimated timeline for the delisting, including advance notice to customers and a prepared plan to analyze the impact.
Once approved, companies may independently assess a coin’s compliance with the standards without seeking permission from NYDFS. However, companies still need to continuously update NYDFS in writing with a comprehensive portfolio of coins they are offering or utilizing.
Director Adrienne Harris of NYDFS asserts:
“This guidance is necessary to enhance standards prior to coin offerings, and any deficiencies identified through examinations will also be updated accordingly.
When we discover a coin that investors believe is sound, or when we identify risks and misuses of that coin, we want companies to have a delisting solution in place to protect users in a safe and sound manner.”
The new legal frameworks were introduced as Director Harris celebrated her two-year tenure at the helm of New York’s largest financial regulatory agency. NYDFS has consistently sought to make New York a leader in regulating insurance, banking, and finance to establish a comprehensive governance program for cryptocurrencies nationwide.
Under Director Harris’s leadership over the past two years, the agency has taken several legal actions against cryptocurrency companies, including imposing a $50 million fine on Coinbase exchange for lax KYC practices and levying a $30 million penalty on online cryptocurrency trading platform Robinhood for various allegations, including failure to comply with the Bank Secrecy Act and Anti-Money Laundering rules.
The agency also played a role in overseeing the closure process of Signature Bank and transferring management and full deposit returns to the Federal Deposit Insurance Corporation (FDIC) for customer protection.
During the collapse in March 2023, Signature Bank held assets of $118 billion and became the third-largest bank failure in U.S. history, preceded by Silicon Valley Bank and Silvergate Bank, which occurred in the same month.
This is the next development by NYDFS in April 2023, as they planned to issue new regulations on how cryptocurrency companies will be evaluated. According to the announcement at the time, the legal framework requires companies to meet strict standards regarding capital, cybersecurity, and anti-money laundering measures.
Since the beginning of 2023, the United States has consistently taken legal actions in supervising the cryptocurrency industry, including:
- In April 2023, the U.S. House of Representatives introduced a draft bill for new stablecoin legislation, which proposed banning stablecoins backed by other cryptocurrencies and directing research on central bank digital currencies (CBDC).
- On August 14th, 2023, the Federal Deposit Insurance Corporation (FDIC) issued several supervisory measures and guidelines to address the risks associated with cryptocurrency assets.