If state banks wish to deal with cryptocurrency, they must now produce a business strategy for the NYDFS.
New York’s Banking Regulators’ crypto-guidelines
Following the demise of the digital currency exchange FTX, New York authorities today announced crypto guidelines for banks.
The NYDFS (NY State Department of Financial Services) said on Thursday that state-licensed banks must present a business plan to the agency at least 90 days before they engage in cryptocurrency-related activities.
After that, according to the NYDFS, the DFS will evaluate the bank’s plan by looking at risk analysis, oversight and corporate governance, client protection, monetary analysis, and legal and regulatory research.
The goal, as stated by the NYDFS, is to “defend customers’ hard-earned money.”
In a statement, A. Harris emphasized the need for prompt and open communication amongst regulators about the development of our regulatory strategy.
The restriction was implemented after the stunning collapse of the cryptocurrency exchange FTX last month.
The once-famous digital currency exchange is said to have been poorly run and mixed up client cash with its brother trading company Alameda Research, which made it unsustainable and caused it to fail.
Since the bankruptcy, clients’ investments totaling billions of dollars appear to have vanished into thin air, which has caused American officials to reconsider their approach to regulating the still-developing sector.
Following the demise of FTX, Democratic senators Elizabeth Warren and Tina Smith last week wrote a letter to FR Chair Powell Jeromerequesting details on American institutions’ connections to cryptocurrency.
Letters for Michael Hsu and Marting Gruenberg
The two politicians that are famous for their condemnation of cryptocurrencies in general also wrote letters to Hsu Michael and Martin Gruenberg of the FDIC, expressing concerns that crypto companies may have stronger relations with the financial system than before.
This is due to Alameda Research (Bankman-Fried’s crypto firm) investing 11.5 million USD in Moonstone (a bank in US capital), and lawmakers assert that other U.S. banks are experiencing “heightened volatility” as a result of linkages to the cryptocurrency market.
Sam Bankman-Fried, the founder and former CEO of FTX, was detained on Monday in The Bahamas due to a request for his extradition from FTX’s home nation by American authorities.
He is currently being held without bond after having eight criminal accusations, including wire fraud, brought against him.