The rush for ICO’s has often been a landscape where caution is tossed aside and the consequences of hasty decisions can be severe. Cryptocurrency listings have allegedly become a breeding ground for token projects that could be potential rug pulls or scams.
Now, the New York State Department of Financial Services (NYDFS) has rolled out stringent guidelines on cryptocurrency listings and delistings within the state. From November 15, crypto companies will be asked to seek NYDFS approval for their coin listing and delisting policies.
Enhanced risk assessment standards
The NYDFS is set to update company policies against risk assessment standards that cover technological, operational, cybersecurity, market, liquidity, and illicit activity risks associated with the tokens. Their motive behind this move is to ensure a safer investment environment for crypto investors.
These changes will have a broad reach that will cover all crypto entities licensed under the New York Codes, Rules and Regulation, or limited purpose trust companies under the state’s Banking Law. Well-established entities like Circle, Gemini, Fidelity, Robinhood, and PayPal will also fall under the umbrella of these new rules.
Strict Oversight and Compliance Deadlines
Tokens cannot be self-certified by companies without NYDFS clearance that had previously had their coin listing policy approved. The affected firms must meet with the NYDFS by December 8, 2023, to present draft coin listing and delisting policies, with the final submission deadline set for January 31, 2024.
Superintendent of Financial Services, Adrienne A. Harris, said the NYDFS’s has taken an “innovative and data-driven approach” to oversee coin listings and delisting.
She clarified that this move is designed to ensure a well-regulated marketplace. It does not indicate of a statewide crackdown.
Earlier this year in February, the NYDFS expanded its capabilities to identify crypto-related crimes. They wanted to track insider trading and market manipulation.
NYDFS’s claims that it seeks to strike a balance between investor protection and friendly environment for technological innovation. A report released by SEC showed that there had been a notable 8% increase in enforcement actions. Totally, the SEC filed 784 cases which resulted in nearly $5 billion financial compensations.