The New York Division of Monetary Providers (NYDFS) advisable on Jan. 23 that custodians ought to segregate buyer and company crypto belongings.
Superintendent Adrienne A. Harris recommended that right this moment’s steering is part of the state’s broader makes an attempt to manage cryptocurrency. She mentioned:
“[The Department of Financial Services’] digital forex regulation has protected New Yorkers since 2015. Right this moment’s steering reminds DFS-regulated digital forex corporations of our expectations concerning the safekeeping of buyer belongings.”
The primary advice superior in right this moment’s steering is the segregation of crypto accounts. The NYDFS means that an organization’s custodian ought to individually handle company belongings and digital currencies deposited by clients.
Particularly, company and buyer belongings must be held in separate on-chain wallets, although particular person buyer accounts may be mixed into an omnibus account. The 2 teams of belongings must also be handled individually throughout accounting.
Right this moment’s steering additionally specifies that the custodian ought to have restricted curiosity in belongings: custodians ought to maintain all belongings solely for safekeeping and mustn’t enter a debtor-creditor relationship. Custodians can, nevertheless, make sub-custody preparations with a 3rd social gathering. Custodians ought to disclose all related phrases and circumstances.
This steering is explicitly supposed to guard clients in case a service turns into bancrupt. Additionally it is meant to stop the co-mingling of funds.
Harris advised Reuters that the newly-announced steering was not particularly motivated by the collapse of FTX, which noticed the corporate mismanage funds and person deposits together with Alameda Analysis. Harris known as that occasion “well timed” however asserted that the NYDFS had deliberate to launch steering on the matter for a while.
Harris mentioned that the NYDFS plans to launch upcoming steering on stablecoins, promoting, and disclosures. The company may also give attention to anti-money laundering guidelines this 12 months.
Right this moment’s steering applies to corporations which are permitted to supply custody in New York, which is acknowledged for its strict regulatory stance towards crypto. So far, simply 31 companies have obtained both the state’s BitLicense or its Restricted Function Belief Constitution.