New York Regulator Proposes Stricter Guidelines for Crypto Coin Listings and Delistings

The New York State Department of Financial Services (NYDFS) has unveiled proposed updates to its guidelines concerning the listing and delisting of crypto coins, aiming to enhance transparency and risk assessment standards in the crypto industry. The NYDFS, led by Superintendent Adrienne Harris, has cited the need for these changes to address deficiencies identified during regulatory examinations and to create a comprehensive framework for coin offerings.

The key aspects of the proposed guidance include:

Coin Listing Policies:

  • Firms must draft firm-specific coin listing policies that align with their business models, operations, and customers.
  • Governance structures for coin listing processes should be established, with approval by an independent governing authority.
  • Thorough risk assessments for each listed coin, including evaluations of technical design, operational, IT/cybersecurity, market, and legal risks.
  • Periodic re-evaluation of listed coins, with the frequency depending on the specific coin’s characteristics.
  • Compliance with consumer protection principles and cybersecurity requirements.

Coin Delisting Policies:

  • Clear and structured processes for coin delisting decisions, including the identification of events that may prompt removal.
  • Advance notice of at least 30 days to customers impacted by a coin delisting.
  • Customer support mechanisms for assisting affected customers in selling or transferring delisted coins.
  • Comprehensive documentation of delisting decisions and their impacts.
  • Ongoing monitoring of delisting events for safety, soundness, and customer protection.
  • Impact analysis to assess the implications of delisting on the business and customers.

The proposed framework represents a significant step forward in regulating the cryptocurrency industry, with a specific focus on improving standards for coin listings and delistings. NYDFS’s Superintendent Adrienne Harris emphasized the importance of these updates, especially as they address the delisting process for the first time.

Furthermore, as part of the proposal, NYDFS is requesting virtual currency companies registered in the state to submit new coin-listing and delisting policies. The proposed guidelines are open for public comment until October 20, 2023.

Notably, the NYDFS has updated its list of “greenlisted” coins that can be listed or held in custody without further regulatory approval. This list now includes bitcoin (BTC), ether (ETH), and stablecoins issued by PayPal and Gemini. These updates are in line with New York’s ongoing efforts to regulate the crypto industry effectively.