New York Banks Must Seek Advance Permission for Crypto Activity, Regulator Says
New guidance from the state Department of Financial Services sets a 90-day advance notice period
New York State-registered banks will need to seek regulatory permission 90 days before they get involved in cryptoassets, even if it's via a third party, new guidance from the state banking regulator said.
Banks will have to submit business plans and operating models to the Department of Financial Services, including details of which customers they're targeting, the guidance published Thursday said.
“Today’s guidance is critical to ensuring that consumers’ hard-earned money is protected, that New York regulated banking organizations remain resilient and competitive, and that the expectations are clear for those that wish to submit proposals for virtual currency-related activity," Superintendent Adrienne Harris said in a statement.
"The Department takes seriously the potential risks that novel activities, including in particular virtual currency-related activities, may pose to Covered Institutions, to consumers, and to the market in general," the guidance added.
The regulator wants banks to check whether there are risks of ripping off consumers, cyberattacks, or undermining the bank's capital base before approving plans, the guidance said.
It applies to a wide range of crypto services including transmission, custody and buying and selling, even if operated via a third party under contract, and those already involved in crypto need to notify regulators "immediately" if they didn't already, the Department said.
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