The New York Department of Financial Services (NYDFS) January 23rd Custodians must segregate customer and corporate crypto assets.
Superintendent Adrienne A. Harris suggested that today’s guidance is part of the state’s broader attempt to regulate cryptocurrencies. she said:
“[The Department of Financial Services’] Cryptocurrency regulations have protected New Yorkers since 2015. Today’s guidance reminds DFS-regulated cryptocurrency companies of our expectations regarding the custody of customer assets. ”
The main recommendation going forward in today’s guidance is the segregation of cryptocurrency accounts. The NYDFS proposes that corporate custodians should keep corporate assets and customer-deposited cryptocurrencies separate.
Specifically, corporate and customer assets should be held in separate on-chain wallets, while individual customer accounts can be combined into an omnibus account. The two groups of assets must also be treated separately during accounting.
Today’s guidance also stipulates that custodians should have limited interest in assets. Custodians must hold all assets for safekeeping purposes only and must not enter into a debtor-creditor relationship. However, the Custodian may enter into sub-custody arrangements with third parties. Custodians must disclose all relevant terms.
This guidance is expressly intended to protect customers in the event that services become insolvent. It also aims to prevent confusion of funds.
Harris said Reuters The newly announced guidance was not specifically motivated by the collapse of FTX, where the company worked with Alameda Research to mismanage funds and user deposits. ‘, but NYDFS asserted that it had been planning to issue guidance on the matter for some time.
Harris said the NYDFS plans to release upcoming guidance on stablecoins, advertising, and disclosures. The agency will also focus on anti-money laundering regulations this year.
Today’s guidance applies to companies licensed to offer custody in New York, which is known for its strict regulatory stance on cryptocurrencies. To date, only 31 companies have obtained either the state BitLicense or the Limited Purpose Trust Charter.