New York DFS Revamps Crypto Regulations: Ripple and Dogecoin Delisted
The New York Department of Financial Services (DFS) has recently unveiled significant updates to its crypto regulation framework. This overhaul introduces fresh criteria for digital firms licensed by the DFS to list various cryptocurrencies. Notably, more than two dozen tokens, including Ripple, Dogecoin, and Litecoin, have been removed from the agency's "greenlist" of approved cryptocurrencies. Nevertheless, eight tokens, among them Bitcoin, Ether, and the new PayPal Dollar, remain on the list.
DFS's proactive stance in digital asset oversight has solidified its position as a leading national regulator. Despite industry criticism for its rigorous licensing process, these new regulatory guidelines showcase DFS's cautious approach to crypto regulation, setting it apart from state and federal agencies that opt for more punitive measures.
The DFS implemented the "greenlist" as part of its comprehensive crypto supervision strategy. Under the previous rules, firms licensed by the DFS could gain token custody and listing approval through a self-certification system, simplifying the process while preserving the DFS's supervisory role. Once two firms self-certified a token for custody or listing, it earned a spot on the DFS greenlist, streamlining access for all DFS-licensed entities.
However, with the updated guidance, the DFS has reduced the greenlist to only eight tokens. Surprisingly, the second-largest stablecoin by market capitalization, USDC, issued by BitLicense recipient Circle, is absent from both the previous and updated greenlists.
DFS's spokesperson commented, "The list of greenlisted coins adheres to the new framework, reflecting our updated criteria."
In addition to modifying the greenlist, the DFS's latest guidance aims to clarify coin-listing and delisting expectations for DFS-regulated entities. Furthermore, it introduces more rigorous risk assessment standards for coin-listing policies and heightened requirements for retail-facing businesses. This marks a departure from the prior self-certification system. Licensees must also establish token-delisting policies to ensure a smooth cessation of support for coins, minimizing user impact.
Under the leadership of Superintendent Adrienne Harris, the DFS has taken an assertive regulatory role during the crypto market's downturn. The department has imposed penalties on cryptocurrency companies, including a $100 million settlement with Coinbase in January 2023 for compliance program shortcomings. In February, DFS directed crypto firm Paxos to halt the issuance of BUSD, a prominent stablecoin developed in collaboration with Binance.
Despite industry reservations, DFS has garnered reluctant respect within the U.S. crypto sector, as other regulators, such as the Securities and Exchange Commission, remain hesitant to establish comprehensive rules in this volatile domain. The revised greenlist exemplifies the ongoing challenge faced by crypto firms, especially exchanges, as they navigate the complexities of regulatory uncertainty.