On September 18, 2023 the New York State Department of Financial Services (DFS) issued an update on an ongoing initiative to strengthen DFS oversight of virtual currencies. A central aspect of the proposed guidance are enhanced criteria for coin-listing and delisting procedures.
DFS wants to establish itself (or, as DFS sees it, maintain is role) as the leading cryptocurrency regulator in the country. Towards that end, the DFS press release states: “The Department has added more than 60 experts to oversee licensing and strengthen supervision, enhanced existing and established new policies and procedures, and enacted new assessment authority to support the continued growth of the virtual currency unit. To address emerging issues, DFS issued eight pieces of innovative industry regulatory guidance, including first-in-the-nation regulatory guidance setting foundational criteria for USD-backed stablecoins issued by DFS-regulated entities, guidance to better protect customers in the event of a virtual currency insolvency or similar proceeding, and guidance for establishing the use of blockchain analytics tools as a best practice for virtual currency entities to prevent and manage financial risks and suspicious activities.”
DFS also took action with respect to its “Greenlist” of coins pre-approved by DFS. Companies regulated by DFS are required to submit a firm-specific coin listing policy and to seek DFS approval before listing or offering custody for a coin, unless the coin is on the Greenlist. On September 18, 2023, DFS issued an updated list of Greenlisted coins. There had been more than 20 greenlisted tokens, including XRP, Dogecoin, Litecoin and Bitcoin Cash. Now, there are only eight — Bitcoin and Ether, as well as six stablecoins from Paypal and Gemini.