NYDFS calls for public feedback on proposed crypto regulatory guidance

September 18, 2023 Coin Telegraph

BitLicense

The proposals included stricter standards on risk assessments for crypto firms as well as a framework for designating token projects to the NYDFS' greenlist

The New York State Department of Financial Services, or NYDFS, has called on the public to provide feedback to a proposal aiming to strengthen regulatory requirements for crypto firms operating in the state.

In a Sept. 18 notice, the NYDFS said Superintendent Adrienne Harris had released proposals on guidance for “enhanced criteria for coin-listing and delisting procedures” in addition to a framework "for designating coins or tokens” to the regulator’s greenlist. The proposal included recommendations for heightened standards focusing on illicit finance, legal, reputational, market and liquidity, and regulatory risks.

“Since joining DFS, I have made it a priority to ensure the Department’s regulatory and operational capabilities keep pace with industry developments to protect consumers and markets,” said Harris. “In less than two years, we’ve built our team to over sixty experienced professionals, created and enhanced consumer and industry safeguards, and engaged with policymakers around the world.”

NEW: Superintendent Harris Announces Update on Two-Year Transformational Initiative to Strengthen NYDFS’ Nation Leading #VirtualCurrency Oversight.

More: https://t.co/llh9K3dM13 pic.twitter.com/nOJvfuel00
— NYDFS (@NYDFS) September 18, 2023

At the time of publication, the NYDFS greenlist for tokens included Bitcoin (BTC), Ether (ETH), and several stablecoins issued by Gemini and PayPal. The announcement also followed the adoption of rules allowing the NYDFS to assess supervisory costs from licensed crypto firms operating in New York.

Since 2015, crypto firms operating in New York have largely been required to apply for a BitLicense through the NYDFS. The regulator’s list showed trading platform eToro was the most recent to receive a license in February, making more than 30 firms licensed in the state.

Magazine: Crypto City: Guide to New York

Société Générale subsidiary becomes the first fully-licensed crypto provider in France

July 19, 2023 Coin Telegraph

Banks

Forge will have a right to custody digital assets, to purchase and sell them for legal tender, and to trade them against each other.

Forge, a subsidiary of Société Générale — the third-largest bank in France — became the first company to obtain the highest access license for providing crypto services in the country — a prerequisite for numerous service activities (PSAN). The provider will have a right to custody digital assets, to purchase and sell them for legal tender, and trade them against each other.

Local media paid attention to the update in the register of the French stock market regulator, the Autorité des Marchés Financiers (AMF), on July 19. As the Société Générale representatives state in the press release:

“Accreditation represents the highest level of regulatory certification currently possible for digital asset transactions.”

So far, around 90 companies have already been on the AMF list of licensed providers. For example, the subsidiary of Société Générale’s powerful competitor, Crédit Agricole, got approval for digital custody in June 2023. However, Forge became the first to receive the highest approval for numerous services from the regulator. As the French radio station Business FM stated, such stringent requirements for this level of approval give an obvious advantage to large traditional banks over smaller crypto companies.

Société Générale has been quite active in the crypto sector, issuing euro bonds on the Ethereum blockchain and security tokens on the Tezos blockchain, and proposing Dai (DAI) stablecoin loans in exchange for bond tokens. In April 2023, Forge launched EUR CoinVertible, a euro-pegged stablecoin for qualified institutional clients. The new digital asset is only available to investors onboarded by Societe Generale through its existing Know Your Customer and Anti-Money Laundering procedures.

While France remains one of the friendliest European jurisdictions to crypto, the local arm of Binance has been the subject of a preliminary investigation conducted by the Judicial Investigation Service of Finance under the direction of the specialized interregional jurisdiction of Paris.

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NYDFS adopts regulation to assess supervisory costs for licensed crypto firms

April 17, 2023 Coin Telegraph

BitLicense

Since 2015, crypto firms operating in the state of New York have largely been required to apply for a BitLicense to offer services.

The New York State Department of Financial Services, or NYDFS, has adopted a regulation that will allow the government agency to assess supervisory costs from licensed crypto firms operating in the state.

In an April 16 announcement, the NYDFS said the supervisory costs enforced by the new regulation would be used for “adding top talent to its virtual currency team”. The government department will assess costs for the supervision and examination of crypto firms operating in the state with a BitLicense.

“This regulation provides the Department with additional tools and resources to regulate the virtual currency industry now and in the future as innovators create new products and use cases for digital assets,” said NYDFS Superintendent Adrienne Harris.

#ICYMI: DFS Superintendent Adrienne A. Harris Announces Adoption of Virtual Currency Assessment Regulation: https://t.co/6W5ShsYjEx pic.twitter.com/xcevSyw2O9
— NYDFS (@NYDFS) April 17, 2023

Crypto firms operating in the state of New York are largely required to apply for a BitLicense, a requirement for companies since 2015. The NYDFS proposed adopting the regulation to assess costs in December 2022, after which time it met with “key stakeholders” and received feedback. According to the regulator, the proposed rule was added in response to the state’s Financial Services Law not including such a provision on the assessment of operating costs.

The NYDFS listed 33 companies involved in crypto and blockchain operating in the state under a virtual currency license, limited purpose trust charter, or money transmitter license as of Feb. 10. New York City Mayor Eric Adams suggested the state scrap the BitLicense regime in April 2022, claiming the requirements stifled innovation and economic growth.

Magazine: Crypto City: Guide to New York

Report: Paypal Puts Stablecoin Plans on Hold as US Regulators Crack Down on Crypto Industry

February 11, 2023 Bitcoin.com

Stablecoin issuer Paxos reportedly probed by New York regulators

February 10, 2023 Coin Telegraph

BitLicense

While the exact reason for the investigation hasn’t been revealed, it has been reported that the New York regulator plans on upping its efforts to protect consumers this year.

Paxos Trust Company — the New York-based stablecoin issuer behind Binance USD (BUSD) and Paxos Dollar (USDP) — is reportedly being investigated by the New York Department of Financial Services (NYDFS).

A “person familiar with the matter” told Bloomberg in a Feb. 10 report that the exact motive behind the probe is currently unclear.

An NYDFS spokesperson declined to comment on ongoing investigations but noted that the department is broadly working to protect consumers from risks associated with investing in the cryptocurrency market:

“The department is in continuous contact with regulated entities to understand vulnerabilities and risks to consumers and the institutions themselves from crypto market volatility we are experiencing.”

Paxos has issued BUSD — a U.S. Dollar-collateralized stablecoin — since the firm struck a partnership with Binance in September 2019. It is the third largest stablecoin, with a market cap currently exceeding $16 billion.

It is also the creator of the Paxos Dollar (USDP) which was launched in 2018. Today it is the sixth largest stablecoin with a market cap of about $875 billion, according to CoinGecko, and is the founder of PAX Gold (PAXG), a gold-backed-Ethereum token.

The company is also behind digital asset exchange itBit, which it launched in 2012 alongside the founding of Paxos.

The NYDFS issued Paxos with “BitLicense” in 2015, which legally permits companies to conduct digital currency-related activities in the state of New York.

Paxos recently refuted rumors that the U.S. Office of the Comptroller of the Currency (OCC) may order Paxos to withdraw its application for its full banking charter, despite the firm only receiving a preliminary approval in April, 2021.

To clarify speculation: Paxos has not been asked to withdraw its application for a national trust bank charter from the OCC, nor has it been denied the charter. Paxos continues to work constructively with the OCC.
— Paxos (@PaxosGlobal) February 8, 2023

Paxos also claims on its website that its BUSD and USDP token reserves are backed wholly in U.S. Dollars and U.S.Treasuries.

If reports of the investigation are true, it wouldn’t be the first one initiated by the NYDFS over the last year.

Coinbase Global U.S. reached a $100 million settlement with the New York regulator on Jan. 4 after they found that they failed to look over about 100,000 suspicious transactions from customers who opened accounts without sufficient background checks.

Shortly after Terra LUNA ecosystem and its failed algorithmic stablecoin TerraClassicUSD (USTC) collapsed in May, 2022, the NYDFS published stablecoin guidance report to ensure stablecoin issuers fully back their assets and attest regularly.

Cointelegraph reached out to Paxos and Binance to comment on the matter but did not receive an immediate response.

New York State issues guidance for banks seeking to engage in activities with crypto

December 15, 2022 Coin Telegraph

Banks

The state, a notoriously demanding regulator of the industry, has released detailed guidelines for banks’ applications; some licensed banks may have to play catchup.

The New York state Department of Financial Services (DFS) released guidance on Dec. 15 for regulated banks seeking to engage in activities with virtual currency. The guidance, which took effect immediately, describes the application process and “summarizes the types of information the Department considers relevant” for obtaining the agency’s approval.

The 11-page document consisted largely of bullet points as it described the informational requirements for several categories, such as “Business Plan” and “Consumer Protection,” in detail, followed by a series of formal checklists.

Approval is required 90 days before engaging in activities, the document reminded. Approval for prior activities “does not constitute general consent” for other activities, and some activities by third-party service providers may require the agency’s approval as well.

As much as it pains me to admit this, the @NYDFS Bitlicense accomplishes many of these goals; and the DFS is working closely w/ other regulators like the UK. https://t.co/q2zEJfZ3qT pic.twitter.com/8CxSX2UZ91
— matthew sigel, recovering CFA (@matthew_sigel) December 14, 2022

Furthermore, institutions that are already engaged in virtual currency activities were instructed in the statement accompanying the guidance to check in with their points of contact at the agency immediately.

DFS superintendent Adrienne A. Harris said in a statement on the new guidance:

“It is critical that regulators communicate in a timely, transparent manner about the evolution of our regulatory approach.”

New York is known as a tough regulator of crypto businesses, and has come under criticism from New York City Mayor Eric Adams and many others for stifling economic innovation and growth. Harris has defended the state’s approach vigorously. In light of this, detailed guidance may be highly valuable for regulated institutions.

New York was one of the first states to license virtual currency activities when it introduced its so-called BitLicense in 2014. It also claimed to be the first state to impose strict requirements for stablecoin reserves and redeemability in June. In December, the state proposed adding an annual assessment fee for licensed crypto firms under new powers granted to the agency in April.

NYDFS proposes regulation to assess costs of ‘supervision and examination’ for licensed crypto firms

December 1, 2022 Coin Telegraph

BitLicense

Though some crypto firms operate in New York with a BitLicense, many including NYC Mayor Eric Adams have criticized the licensing regime as a difficult barrier to cross.

The New York State Department of Financial Services, or NYDFS, has proposed a regulation which would allow the government department to assess supervisory costs from licensed crypto firms operating in the state.

In a Dec. 1 announcement, NYDFS Superintendent Adrienne Harris opened the proposed budget measure for public comment. The regulation, if approved, would grant the department the authority to assess costs for the supervision and examination of firms operating in the state with a BitLicense — a requirement for crypto companies since 2015.

“This assessment authority will allow the Department to continue building the team that is leading the nation with a suite of regulatory tools,” said Harris. “The ability to collect supervisory costs will help the Department continue protecting consumers and ensuring the safety and soundness of this industry.”

#ICYMI: DFS Superintendent Adrienne A. Harris Announces New Proposed Virtual Currency Assessment Regulation. Read the Superintendent’s quote below ⬇️ pic.twitter.com/ITI9cxcPFA
— NYDFS (@NYDFS) December 1, 2022

Though some crypto firms continue to operate in New York with a BitLicense, many including New York City Mayor Eric Adams have criticized the measure as a difficult barrier to cross. The BitLicense originally cost $5,000 in application fees, with the NYDFS setting certain capital requirements for operations.

The proposed regulation built upon a rule signed into law in April granting the NYDFS “authority to collect supervisory costs from licensed virtual currency businesses.” Harris said the rule would help bring regulations of crypto firms in line with those imposed on banks and insurance companies.

According to the NYDFS, the proposal will initially be open to public comment for 10 days, then an additional 60 days upon publication in the state register.

New York Mayor urges state to abandon ‘stifling’ BitLicense scheme

April 28, 2022 Coin Telegraph

BitLicense

“We have to continue to be competitive” the mayor said in a keynote interview at a London crypto conference where he suggested scrapping the states’ BitLicensing requirement.

New York City Mayor Eric Adams has hit out at his states’ BitLicensing regime, claiming that it stifles innovation and economic growth.

In a closing keynote interview at the Crypto and Digital Assets Summit in London on April 27, Adams suggested his state legislature counterparts in Albany “listen to those who are in the industry” adding:

“It’s about thinking not only outside the box, but on this one, we may have to destroy the box.”

Adams is a crypto advocate who ran for mayor planning to turn New York City into the “center of the cryptocurrency industry” and took his first three paychecks in Bitcoin (BTC). In the interview he said cryptocurrencies and blockchain technology are the “next chapters in the future” and the opportunity shouldn't be squandered.

“New York State is the only state to require a license for crypto companies. That’s a high barrier, and it just makes us less competitive. We have to continue to be competitive.”

Since 2015, any “virtual currency business” wishing to offer services within New York requires a BitLicense to do so. According to the states’ Department of Financial Services (DFS) the license ensures that its residents have a “well-regulated way to access the virtual currency marketplace” and that the state remains at the “center of technological innovation and forward-looking regulation”.

Many crypto firms moved from New York when the license was introduced and recent calls to remove regulatory barriers and ease restrictions often focus on the license, which costs $5,000 in application fees along with unclear capital requirements set by the DFS.

In the state capital, lawmakers take an altogether stricter regulatory approach to the cryptocurrency industry than Adams would. On Tuesday the New York State Assembly passed a bill to the Senate which would place a two-year ban all on all new proof-of-work (PoW) cryptocurrency mining facilities using carbon energy.

On April 9 Governor Kathy Hochul signed into law a requirement that BitLicensed firms must pay assessment fees to cover the cost of regulatory operating expenses incurred by the DFS, placing possibly tens of thousands of dollars a year extra in fees on firms.

“It is imperative that we work with the state lawmakers and regulators,” Adams said “I’m really happy to see Governor Hochul is leaning into this industry as we examine what are the bureaucratic issues that we need to look at.”

BitLicensed Crypto Firms Ordered to Pay Annual Assessment Fees in New York

April 19, 2022 Coin Telegraph

assessment fees

The fees will bring virtual currency companies on par with those paid by banking and insurance institutions as a way for the state to recoup operating expense costs and “best support” the industry.

The cost of running a crypto business in New York is about to rise with the state government gearing up to require companies holding a BitLicense to pay assessment fees to ensure they’re complying with regulations.

The rule was included in New York State’s FY2023 budget signed into law on April 9th by Governor Kathy Hochul giving the state's Department Of Financial Services (DFS) a “new authority to collect supervisory costs from licensed virtual currency businesses,” according to a statement by the DFS.

DFS Superintendent Adrienne Harris said the fees would bring virtual currency businesses in line with those already paid by institutions such as banking and insurance companies and added:

“New York was the first to start licensing and supervising virtual currency companies, and we continue to attract more licensees and the most crypto startup funding of any state in the nation.”

The state of New York was the first in the U.S. to require crypto companies to be licensed with the introduction of the now known “BitLicense”, the application fees for such a permit are currently $5,000 and are subject to vague capital requirements determined by the New York DFS.

The annual assessment fee amount that the DFS will charge crypto firms is currently unknown, but the same fees for other regulated financial institutions can cost tens of thousands of dollars a year.

The DFS states the fees are to assist with paying the operating expenses of regulating crypto firms and “will empower the Department to build staff with the capacity and expertise to best regulate and support this rapidly growing industry.”

Businesses that accept crypto as payment, create software for the crypto space such as self-custody wallets, or give advice on crypto trading aren’t subject to the BitLicense and corresponding new fees.

Recently, the regulation and licensing of crypto in the state have come under fire with billionaire investor Bill Ackman sharing his thoughts in February about New York’s failing policies and how it could make him leave the state.

Ackman appealed to Mayor Eric Adams and Governor Hochul to address the increasing concerns around regulation, saying that easing restrictions and removing regulatory barriers could make New York a “crypto center of innovation.”

Mayor Adams ran with plans to make New York City the “center of the cryptocurrency industry” even taking his first three paychecks in Bitcoin (BTC). Analysis from Cointelegraph in November shows that it’s really up to the New York DFS and state government to enact changes that will attract the industry.

Billionaire Bill Ackman calls for crypto clarity in New York

February 10, 2022 Coin Telegraph

Bitcoin

Billionaire Bill Ackman has called upon the city authorities to ensure that more innovators don’t migrate because of the regulatory hurdles.

Billionaire investor Bill Ackman has called upon New York City mayor to look into the crypto regulatory clampdowns associated with BitLicense.

A New Yorker shared his aghast on Twitter about the flawed crypto policies of the city and how it could force him to leave it. The user lashed out at the Bitlicense policy of the city and claimed he could not open an account with any major United States exchange for his venture capital firm because of it.

Bitlicense was introduced in 2015 that governed various aspects related to crypto issuance and exchange. Any virtual currency business operating in the state of New York or managing such investments from residents of New York must obtain the license before starting operations. However, major crypto platforms are concerned as strict licensing requirements caused some to move out.

Billionaire Bill Ackman called upon newly elected city Mayor Eric Adams and Governor Kathy Hochul to look into the growing regulatory concerns. He stressed removing regulatory barriers and easing regulations could be key to making the city a crypto hub. He said:

@NYCMayor @GovKathyHochul lets fix this right away. We can’t lose any more New Yorkers. NY is on its way to becoming a crypto center of innovation. Let’s remove barriers, create opportunities for growth and innovation, and help our state and city! https://t.co/H9tsG4OO9W
— Bill Ackman (@BillAckman) February 9, 2022

Eric Adams, the newly elected Mayor who ran the elections with crypto as the main agenda, has also come under fire recently for advocating against Bitcoin (BTC) mining in the state. During a local government budget hearing with elected officials in Albany, Adams said he supports cryptocurrency but not crypto mining.

While many politicians over the past couple of years have shown great interest in the crypto industry and many politicians running for an election have made crypto a central agenda of their campaign. However, a majority of them seem to be using crypto just as a campaign tool.

BitLicense

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