New York Regulator Tells Crypto Firms to Develop Coronavirus Contingency Plans

NYDFS is asking all crypto firms operating in New York to prepare detailed plans in case day-to-day operations are disrupted by the coronavirus outbreak.

Mar 13, 2020 at 9:00 a.m. UTC
Updated Sep 14, 2021 at 8:19 a.m. UTC

New York’s Department of Financial Services (NYDFS) is requiring the state’s sanctioned cryptocurrency firms to provide detailed coronavirus preparedness plans, signaling the seriousness COVID-19 poses to businesses as well as public health.

“Virtual currency” businesses must produce contingency plans with painstaking and granular detail, according to a letter sent Tuesday. Preparations must include employee protection strategies, increased cyber-risk mitigation, disaster communication plans and procedures to ensure the continued functioning of critical operations “at a minimum.” They must also lay out their point-by-point plans for the eventuality of a potentially snowballing outbreak.

The regulator showed particular concern over the possibility hackers might try exploiting the virus outbreak. NYDFS “underscored” the risk of under-the-radar hacks and implored firms to consider implementing more robust security measures that could detect “fraudulent trading or withdrawal behavior.”

The agency further highlighted the chance remote workers could imperil custodied assets as they move funds from “cold” (offline) storage to “hot” (internet connected) wallets.

Firms are required to submit their plans in the next 30 days, but preferably “as soon as possible,” according to the letter. A NYDFS press officer did not immediately respond to questions over whether the request applies to all BitLicense holders.

The request offers a striking look at New York’s in-the-moment response to a crisis growing more layered by the hour. When NYDFS issued the memo on Tuesday, New York state was already days into a coronavirus-triggered state of emergency. But businesses across the state and its namesake city, where most of New York’s virtual currency firms are based, were still mulling what, if anything, to do in response to the outbreak.

By Thursday, that dynamic had seemed to change, however. Governor Andrew Cuomo declared a moratorium on mass gatherings and Mayor Bill de Blasio of New York City declared a citywide state of emergency, warning the public that coronavirus could “easily be a six-month crisis” in near back-to-back press conferences.

The drastic shift in public opinion, government outlook and business realities across the week made the plans that only days earlier seem preventative appear far more vital to New York state’s daily life.

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