Expert Proves XRP Still Legal in New York, Despite Not on NYDFS Greenlist

WrathofKahneman (WoK), a prominent figure in the XRP community, has provided clarification on the removal of XRP from the NYDFS’ approved greenlist.

Specifically, the New York Department of Financial Services (NYDFS)’s recent greenlist eliminated XRP among the digital assets approved for custody. The issues sparked concerns, given that a federal court in the United States previously ruled that XRP is a digital asset.

In a recent tweet, WoK clarified that circumstances surrounding XRP’s absence from the green list are not as most people understood. He first elaborated on the NYDFS’ method of virtual asset regulation for companies. 

🧵What does it mean #XRP was removed from the greenlist? Understanding XRP & the NY DFS: A captivating thread about financial regulation in 7 tweets. (The good stuff is in the 5th tweet.)
Just look at the landing page; oh you’re in for a treat!https://t.co/YP891dtBgS

— WrathofKahneman 🪝 (@WKahneman) September 19, 2023

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NYDFS Regulation

Quoting information from an official source, WoK noted that an NYDFS approval, BitLicense, enables companies to offer crypto asset business.

He disclosed that the license permits not only buying, selling, and holding cryptocurrencies but also allows for brokerage services, token issuing, crypto-to-fiat exchange, and more.

Furthermore, WoK highlighted that companies’ seek NYDFS’ approval to access New York markets. On the other hand, the license aims to protect the state’s financial structure. Therefore, it ensures that digital asset providers fulfill standard security practices, reserves, KYC, and anti-money laundering protections.

WoK noted that for the NYDFS to achieve its aim seamlessly, it keeps a green list of cryptocurrencies. The list contains digital assets automatically approved for the license holders. He added that the list is usually short, comprising largely stablecoins. 

Besides, WoK mentioned that XRP was not the only digital asset eliminated from the list. He noted that Litcoin (LTC) and Dogecoin (DOGE) were equally missing.

Licensed Firms Can Still Deal XRP

Furthermore, WoK argued that XRP’s removal does not mean a total ban. He revealed that companies can still deal in XRP and other off-list cryptocurrencies. However, the only bottleneck is that such an endeavor requires further vetting from the New York regulator. 

Specifically, WoK stressed that XRP is not an illegal digital asset under the New York regulation. Instead, it is just not an automatically approved asset for NYDFS-licensed firms.

In his words:

“So the removal only affects co’s that won’t/can’t face the added rigor of applying for a license in NY while offering off-list tokens.” 

6. So the removal tonly affects co’s that won’t/can’t face the added rigor of applying for a license in NY while offering off-list tokens. I assume large co’s; trusts, banks, custody & fintechs that deal in securities must pass a higher level of scrutiny anyways.

— WrathofKahneman 🪝 (@WKahneman) September 19, 2023

Ultimately, WoK stated that XRP’s absence from NYDFS’s green list adds an extra regulatory burden to companies seeking to offer XRP.