The New York Division of Monetary Companies (NYDFS) really useful on Jan. 23 that custodians ought to segregate buyer and company crypto belongings.
Superintendent Adrienne A. Harris urged that right this moment’s steerage 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. At this time’s steerage reminds DFS-regulated digital forex firms of our expectations concerning the safekeeping of buyer belongings.”
The primary suggestion superior in right this moment’s steerage 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 ought to be held in separate on-chain wallets, although particular person buyer accounts could be mixed into an omnibus account. The 2 teams of belongings also needs to be handled individually throughout accounting.
At this time’s steerage additionally specifies that the custodian ought to have restricted curiosity in belongings: custodians ought to maintain all belongings solely for safekeeping and shouldn’t enter a debtor-creditor relationship. Custodians can, nevertheless, make sub-custody preparations with a 3rd get together. Custodians ought to disclose all related phrases and circumstances.
This steerage is explicitly supposed to guard clients in case a service turns into bancrupt. Additionally it is meant to forestall the co-mingling of funds.
Harris instructed Reuters that the newly-announced steerage was not particularly motivated by the collapse of FTX, which noticed the corporate mismanage funds and person deposits along with Alameda Analysis. Harris referred to as that occasion “well timed” however asserted that the NYDFS had deliberate to launch steerage on the matter for a while.
Harris mentioned that the NYDFS plans to launch upcoming steerage on stablecoins, promoting, and disclosures. The company may also concentrate on anti-money laundering guidelines this 12 months.
At this time’s steerage applies to firms which might be permitted to supply custody in New York, which is acknowledged for its strict regulatory stance towards crypto. Up to now, simply 31 corporations have obtained both the state’s BitLicense or its Restricted Objective Belief Constitution.