The New York State Department of Financial Services (DFS) recently released new guidance effective immediately on December 15, which outlines the process for banks to gain approval to engage in virtual currency activities. The 11-page document contains a checklist of the details and information that the organization must provide, including an extensive business plan and consumer protection measures.
The document must be submitted within 90 days of the start of activities, and it does not guarantee blanket approval for any action. The DFS may require additional approval for certain activities or those conducted by a third-party service provider.
As It hurts me to admit it, but the @NYDFS Bitlicense Many of these goals are being achieved and the DFS works closely with other regulators, such as the UK. https://t.co/q2zEJfZ3qT pic.twitter.com/8CxSX2UZ91
— matthew sigel, retrieving CFA (@matthew_sigel) December 14, 2022
The DFS Superintendent, Adrienne A. Harris, also released a statement in regard to the new guidance, saying: “It is critical that regulators communicate in a timely and transparent manner about the evolution of our regulatory approach.”
New York has been known for its strict regulations and regulations on cryptocurrency organizations, which has been a point of criticism from New York City Mayor Eric Adams who claims it has stifled economic innovation and growth. Harris has defended the state’s approach, and the new guidance provides a helpful tool to regulated organizations in understanding the regulations.
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It was New York that first allowed for virtual currency transactions with the launch of their BitLicense in 2014, and was also the first state to impose strict requirements on stablecoin reserves and redeemability. As of December, the state proposed an annual fee for licensed crypto-businesses, and in April, the DFS gave instructions for institutions already involved in virtual currency activities to contact their points immediately.