Crypto companies will be forced to keep customer assets separate from company assets under new guidance due to be published by the New York State Department of Financial Services (NYDFS).
As reported by Reuters, the state’s top financial regulator is pushing for new rules on commingling of funds. The move comes in the wake of the collapse of US-based exchange FTX and trading firm Alameda Research which left the companies’ clients billions of dollars out of pocket.
Under the new guidance, state-regulated companies would also be required to tell customers how they account for clients’ assets.
The NYDFS says need for new guidance predates FTX collapse
As one of the few states that subject crypto firms to enhanced levels of scrutiny, the NYDFS has been busy over the past 12 months. The organization has issued a number of directives to an industry still reeling from 2022’s market collapse and has been working on beefing up its resources, adding to its already 50-strong virtual currency unit.
This increased headcount will help the regulator to keep crypto-related companies in the state up to date with know-your-customer (KYC) and anti-money-laundering (AML) regulations.
Speaking about the new proposal, NYDFS superintendent Adrienne Harris said, “It’s timely, but truth be told, it was something we had on our policy roadmap even before FTX,” (via Reuters).
She added, “DFS’s virtual currency regulation has protected New Yorkers since 2015. Today’s guidance reminds DFS-regulated virtual currency companies of our expectations regarding the safekeeping of customer assets,” (our emphasis).