New York has tightened its rules for cryptocurrency listings and delistings to better protect investors. The New York State Department of Financial Services (NYDFS) announced the new rules on November 15.
Under the new rules, cryptocurrency companies will be required to submit their coin listing and delisting policies to the NYDFS for approval. The NYDFS will review these policies against a set of risk assessment standards to ensure that they adequately protect investors. The factors that the NYDFS will consider include technological risks, operational risks, cybersecurity risks, market risks, liquidity risks, and illicit activity risks associated with the tokens.
The new rules apply to all digital currency business entities that are licensed under the New York Codes, Rules, and Regulations or that are limited-purpose trust companies under the state’s banking law. Cryptocurrency firms that have previously had their coin listing policies approved by the NYDFS will not be allowed to self-certify any new tokens until they have submitted their policies to the NYDFS for review and approval.
Some of the cryptocurrency firms that will be affected by the new rules include Circle, Gemini, Fidelity, Robinhood, and PayPal. These firms will be required to meet with the NYDFS by December 8, 2023, to discuss their draft coin listing and delisting policies. The final policies must be submitted to the NYDFS by January 31, 2024.
New York Superintendent of Financial Services Adrienne Harris said that the NYDFS will be taking an “innovative and data-driven approach” to overseeing coin listings, delistings, and the cryptocurrency market more broadly. Harris also stressed that the new rules are not part of a state-wide crackdown on the cryptocurrency industry. Instead, the goal of the rules is to ensure that New Yorkers have access to a well-regulated virtual currency marketplace.
The NYDFS has been increasingly focused on regulating the cryptocurrency industry in recent years. In February, the NYDFS announced that it had broadened its ability to identify cryptocurrency-related illicit activities, such as insider trading and market manipulation. According to an August report by Coinbase, there are about 690 blockchain-based companies based in New York, and 19% of New Yorkers own cryptocurrency.
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