For New York-regulated financial organizations that desire to participate in virtual currency-related operations, the New York Department of Financial Services has established guidelines.
The advice directs protected institutions to get permission earlier before starting any crypto-related work, even if some of it will be handled by a third party.
All New York-regulated financial institutions as well as branches and agents of international banking institutions that have been granted licenses by the Department (“Covered Institutions”) are subject to the guidance.
According to the Guidance, DFS will take into account the following six broad categories of data when evaluating a Covered Institution’s proposition: business plan, risk management, corporate governance and oversight, consumer protection, financials, and legal and regulatory analyses. A list of preliminary documents and data that a Covered Institution must give for DFS to take into account during its evaluation is also included as an addendum in the Guidance.
“It is critical that regulators communicate in a timely, transparent manner about the evolution of our regulatory approach. Today’s Guidance is critical to ensuring that consumers’ hard-earned money is protected, that New York regulated banking organizations remain resilient and competitive, and that the expectations are clear for those that wish to submit proposals for virtual currency-related activity.”
Superintendent Harris.
Institutions that are already involved in virtual currency-related operations must, if they haven’t already, inform the Department’s point of contact right away. When necessary, the Department will ask for more details or explanations and implement monitoring measures.
In order to create the Guidance, DFS thoroughly examined the regulatory environment and market trends. It also spoke with academics, industry, consumer groups, and other state and federal agencies.
The Guidance is definitive, but DFS is eager to keep talking to relevant stakeholders about these pressing problems. Therefore, interested parties are encouraged to send feedback on this guidance to bankingcomments@dfs.ny.gov, which the Department will consider as it continues to improve the supervisory framework that applies to Covered Institutions.
You can find a copy of the Guidance through the Department of Financial Services site, here: https://www.dfs.ny.gov/industry_guidance/industry_letters
Information from Independent Community Bankers of America