New York State Department of Financial Services (NYDFS) has published new rules to assist banks in submitting proposals for crypto ventures.
The new guidelines require that both NYDFS-licensed foreign banks and New York-regulated financial institutions submit a business plan within 90 days of engaging in crypto activities.
The guidance outlines the information the department will consider when evaluating proposals. The regulator states that it will review the institution’s business plan and risk management, corporate governance, oversight and supervision, as well as financial and legal analysis.
“The Department shall make an extensive assessment of the information provided under this Guidance in order to determine if any proposed activity would be based on the facts, circumstances and risk mitigation measures that the Covered Institution developed to support it–be suitable for a Covered Institution.”
In an effort to reduce the risks associated with digital assets, the department has issued this guidance.
NYDFS Director Adrienne A. Harris has said:
“Today’s Guidance is crucial to ensuring consumers’ hard-earned cash is protected, New York regulated banks and organizations remain resilient, and competitive, while the expectations are clear for those who wish to submit proposals to conduct virtual currency-related activities.”
In the wake of the FTX collapse, the regulator has released the new rules. After a surge in customer withdrawals, the former second-largest cryptocurrency exchange was forced to close its doors. Former CEO Sam Bankman-Fried was accused of using customer funds for the financing of trading activities at affiliate firm Alameda Research.
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