ALBANY, N.Y.—The New York Department of Financial Services has released consumer protection guidance in the event of virtual currency insolvency.
“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,” said New York DFS Superintendent Adrienne A. Harris.
According to the DFS, the guidance applies to those entities the department has licensed or chartered to custody, or temporarily hold, store, or maintain virtual currency assets on behalf of their customers.
The DFS said that as stewards of others’ assets, virtual currency entities that act as custodians, including without limitation, storing, holding, or maintaining custody or control of virtual currency on behalf of others, must have robust processes in place, akin to traditional financial service providers, the release states.
The Requirements
New York’s new virtual currency regulation requires entities to, among other things:
- Hold virtual currency in a manner that protects customer assets
- Maintain comprehensive books and records; properly disclose the material terms and conditions associated with their products and services, including custody services
- Refrain from making any false, misleading or deceptive representations or omissions in their marketing materials
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