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The New York State Department of Financial Services (NYDFS) announced strict guidelines for virtual currency listing and de-listing. In a fresh industry letter released on November 15, the NYDFS clarified that they are issuing fresh and stricter rules for all Virtual Currency Business Entities.
The new listing and de-listing guidelines will apply to companies licensed under 23 NYCRR Part 200 or Chartered as Limited Purpose Trust Companies under the New York Banking Law.
Adrienne A. Harris, Superintendent of Financial Services, said this move will beef up protections for crypto investors throughout the state.
The Framework of New Guidelines
As per new guidelines, the virtual coin entities should consider important factors like business model considerations. The Guidance includes risk-based considerations such as enhanced protections for retail consumers by making virtual currencies that exhibit certain characteristics impermissible for self-certification for any virtual currency business activity available to retail consumers.
The entities should plan and work on risk assessment expectations, which will help to have transparency and more clarity of the risk assessment expectations. It will not only reduce regulatory uncertainty but also ensure compliance for a better experience in the cryptocurrency industry.
Advance notification requirements are also one of the guidelines imposed, which entities commenters noted that in certain cases the advance notification requirements for coin-delistings may not be feasible and could result in unintended consumer harm. The latest guideline provides limited exceptions to advance notification requirements based on exigent circumstances.
In addition, they asked to have clearer definitions, including updated definitions of certain terms and conditions for customers ensuring secure listing and de-listing of tokens.
Furthermore, the new rules also require companies to give advance for token de-listings and to be more transparent with their customers about removing support for cryptocurrencies they once listed.
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Fresh NYDFS Virtual Currency Guidelines & Purpose
As per the issued circular for cryptocurrency entities, the companies must submit their coin listing and delisting policies for NYDFS approval. In addition, the crypto firms need to enlist their policies which will be later measured against more stringent risk assessment standards, ensuring de-listings. The move will enhance security and minimize disruption and market risk in the constantly evolving crypto market.
Notably, the proposed updates to the existing rules are rolled out to strengthen the oversight of virtual currencies for crypto enthusiasts.
Moreover, all the Virtual Coin entities should coordinate with the NY Department around development and must submit a coin-delisting policy to NYDFS for approval by January 31, 2024. VC Entities should also meet with the department by December 8, 2023, and discuss their draft coin-delisting policy.
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