New York Regulators Set New Transparency Rules for Crypto Firms on Coin Listings and Delistings

According to a recent report, the New York State Department of Financial Services (NYDFS) announced new guidelines aimed at enhancing transparency and accountability among crypto firms. The proposed framework, which is the first of its kind to address coin delisting, outlines the expectations for crypto companies when it comes to listing and delisting digital assets. 

New York Wants Regulation In Crypto Coin Offerings 

Set to be published on Monday, the New York State Department of Financial Services (NYDFS) has outlined its proposed guidelines detailing what crypto companies should consider when evaluating a new coin for listing. These guidelines build upon a previous framework. Additionally, for the first time, the regulator has specified the steps and criteria that must be followed by crypto firms before they can delist a digital asset.

NYDFS Superintendent Adrienne Harris revealed the proposed guidelines on Monday, stating that the initiative was born out of deficiencies identified through regulatory examinations. “The guidance was needed to make standards around coin offerings more robust,” Harris said. She also emphasized that this would be the first regulatory guidance specifically addressing the delisting of coins.

The intended purpose of the forthcoming framework is to assist companies in creating policies for both listing and delisting cryptocurrencies. Adrienne said, “When we know that a coin that someone once thought was OK, when we see that new risks have emerged or the coin is being misused, we want our entities to have a way to delist the coin in a way that’s still protective of consumers and protects safety and soundness as well.”

In the proposed guidelines, the NYDFS is requesting that virtual currency firms registered in New York provide their updated policies on coin listing and delisting. The public is invited to offer their comments on the draft legislation until October 20.

Three Focus Areas For Coin-Listing Policies

In the initial 2020 guidelines, the NYDFS required regulated crypto companies to submit a customized coin listing policy and obtain regulatory approval before listing or offering custody for any coin unless the coin was already on the regulator’s approved “greenlist.” The policy needed to be adapted to the firm’s business model, operations, and customer base, among other factors.

Once a firm receives the green light for its coin-listing policy from the NYDFS, it has the ability to self-certify listings, affirming that a coin meets the company’s standards without needing further approval from the regulator. However, the firm is still obligated to give written notice to the NYDFS prior to using the coin and must keep the regulator updated on all coins it offers or utilizes.

The updated framework instructs crypto companies to formulate their coin-listing policies in three key areas: governance mechanisms for listing coins, risk evaluations of the coins, and ongoing monitoring procedures.

For delisting, the proposed guidelines require firms to specify their decision-making process for removing a coin. This includes identifying events that could trigger delisting and outlining execution plans, such as providing customers with advance notice and conducting an impact analysis.

As Superintendent Adrienne Harris celebrates her two-year anniversary as New York’s chief financial regulator, the NYDFS is leveraging the state’s leadership role in the insurance and banking sectors to influence crypto regulation nationwide.

Under Harris’s stewardship, the NYDFS has imposed $132 million in fines on crypto entities, including notable companies like Coinbase and Robinhood’s cryptocurrency division.

Coinbase’s recent report on state-level crypto innovation features New York, revealing that 19% of surveyed New Yorkers own cryptocurrencies. Additionally, one-third see crypto as making the financial system fairer and as a valuable future investment.