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The New York State Department of Financial Services (DFS) has updated its regulatory framework for virtual currency businesses, introducing strict measures that venture capital firms must follow when transacting with digital currencies. This measure aims to improve governance and compliance within the sector.
- On Monday, the DFS required venture capital firms to establish initial strategies for processing coin transactions that adhere to these enhanced standards, which include strict governance procedures and a robust compliance review process .- Before self-certifying coin listings, companies must conduct risk assessments that address a broad range of risks. Obtaining prior approval from the DFS is a mandatory step in this process.- By Thursday, December 7, 2023, venture capital firms must engage in discussions with the DFS regarding their proposed delisting strategies.- Moving forward, by Wednesday, January 31, 2024, venture capital entities must have their final delisting policies reviewed and approved by DFS to ensure continued compliance with the regulations.
In addition to these requirements, entities like Gemini and Robinhood (NASDAQ:) are required to have DFS-approved procedures for listing and delisting cryptocurrencies. These procedures should include security protocols and customer protection measures tailored to each entity’s unique business model. A comprehensive coin review process is required, taking into account the specific characteristics of each coin.
This update follows prior guidance published by the DFS on June 24, 2020, which outlined initial expectations for virtual currency businesses. Until final approval of their delisting policies, virtual currency entities are limited to listing a few tokens from the green list, which has been reduced from more than twenty tokens to just eight, including THE . This restriction underscores DFS’s commitment to maintaining a secure and compliant virtual currency market in New York State.
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