NYDFS Proposes Enhanced Requirements for Cryptocurrency Listings
The NYDFS has (1) proposed updates to its guidance for virtual currency companies seeking to list new cryptocurrencies, and (2) instituted a new General Framework for Greenlisted Coins that replaces the previous Greenlist process.
𝐒𝐮𝐦𝐦𝐚𝐫𝐲 𝐨𝐟 𝐅𝐫𝐚𝐦𝐞𝐰𝐨𝐫𝐤 𝐟𝐨𝐫 𝐂𝐨𝐢𝐧-𝐋𝐢𝐬𝐭𝐢𝐧𝐠 𝐏𝐨𝐥𝐢𝐜𝐲
Each coin-listing policy must contain the following attributes: governance, risk assessments, and monitoring.
—> 𝑮𝒐𝒗𝒆𝒓𝒏𝒂𝒏𝒄𝒆
The proposed guidance requires virtual currency companies to establish robust governance processes for coin listings, including board oversight and approval, independence, conflict disclosure, recordkeeping, and regulatory reporting. Companies must also conduct ongoing reviews to ensure policies remain compliant.
—> 𝑹𝒊𝒔𝒌 𝑨𝒔𝒔𝒆𝒔𝒔𝒎𝒆𝒏𝒕𝒔
Companies must conduct comprehensive risk reviews of all proposed coin listings, evaluating factors like technology, cybersecurity, market manipulation, illicit activity, conflicts of interest, and legal/regulatory compliance. Reviews should ensure customer protection, mitigate conflicts of interest, and comply with all applicable regulations.
Certain types of coins cannot be self-certified for retail consumer-facing products or service offerings, and instead require NYDFS approval:
Stablecoins
Exchange coins (e.g., token issued by an exchange)
Coins that raise concerns over decentralization (e.g., if a single entity can control more than 51% of voting power, etc.)
Bridged coins (e.g., any coin that does not circulate on the protocol that it was natively issued)
If the circulating supply is less than 35% of the total supply
—> 𝑴𝒐𝒏𝒊𝒕𝒐𝒓𝒊𝒏𝒈
Companies must establish ongoing monitoring policies for listed coins, including periodic reevaluation, risk control implementation, delisting criteria, regulatory compliance, and integration with overall risk management.
Note that NYDFS is also proposing to require VC Entities to have a coin-delisting policy. That policy must have at least the following attributes: governance, process, and execution. For example, VC Entities must provide customers with at least 30 days' notice before delisting a coin and have sufficient customer support in place and they must also notify NYDFS 10 days before informing customers.
