On November 15, the New York State Department of Financial Services (NYDFS) released stringent guidelines for crypto listing and delisting. These guidelines mandate crypto firms to seek NYDFS approval for their coin listing and delisting policies.
Under the new guidelines, entities regulated by the NYDFS are prohibited from self-certifying any new cryptos for trading unless they have submitted a compliant coin-listing and delisting policy and received written approval from the NYDFS.
The industry letter announcing the new guidelines stated, “Virtual Currency (VC) Entities that had a previously approved coin-listing policy under the Prior Guidance are not permitted to self-certify any coins until they submit to and receive approval from the Department a coin-listing policy that meets the standards.”
Among the entities affected by these changes are prominent names like crypto exchange Gemini, payments giant PayPal, crypto exchange Coinbase, and payments service provider Bitpay. All affected firms, including these, are scheduled to meet the NYDFS before December 8, 2023, to review their coin listing and delisting policies draft and submit them by January 31, 2024.
In September 2023, the NYDFS requested public feedback on the proposal for these guidelines. Several themes were identified from the feedback and incorporated into the final version of the guidelines. The themes included business model considerations, risk assessment expectations, advance notification requirements, and updated definitions of specific terms in the guidelines.
The guidelines also forbid certain coins. Stablecoins, for instance, are only allowed if they are on the state's greenlist (which currently only has six stablecoins). It disallows any tokens that have been bridged from their native chain. Lastly, it does not allow tokens whose circulation is less than 35 percent of its total supply.
Commenting on the new guidelines, the Superintendent of Financial Services, Adrienne A. Harris, said that the NYDFS would implement an “innovative and data-driven approach” to oversee coin listings, delistings, and the crypto market.
He also clarified that the new rule isn’t part of a state-wide crackdown on the crypto industry: “[We want] to ensure that New Yorkers have a well-regulated way to access the virtual currency marketplace and that New York remains at the centre of technological innovation and forward-looking regulation.”
These guidelines will foster a more transparent and well-regulated New York crypto market. It will provide better protection to investors by setting stricter standards for crypto companies. It will set a precedent for responsible crypto regulation across the crypto industry.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash