Wednesday, February 8, 2023

New York Releases Guide to Protect Clients from Cryptocurrency Insolvency

The New York State Department of Financial Services (NYDFS) published on Monday a guide to protecting consumers in the event of cryptocurrency insolvency, after last year the digital currencies collapsed and that led to the bankruptcy of several companies in the world. FTX sector, Celsius Network and, most recently, Genesis Global Capital.

“Today’s guidance reminds DFS-regulated virtual currency companies of our expectations regarding the custody of client assets,” Adrienne Harris, NYDFS Superintendent, said in a statement today.

New York’s cryptocurrency regulation requires entities to: hold cryptocurrency in a way that protects customer assets, maintain records, properly disclose conditions associated with their products, and not use their marketing in a deceptive manner.

“DFS has used and continues to use all of its regulatory tools to keep pace with the industry, make data-driven policy decisions, and proactively respond to the virtual currency market,” the statement noted.

In addition, the department explains that to carry out the guide it made “a solid analysis of the existing regulatory landscape and market trends.”

The NYDFS began working with this type of digital currency in 2015.

Last week, the lending unit of cryptocurrency firm Genesis filed for bankruptcy protection from US creditors.

For its part, FTX, which was one of the main cryptocurrency platforms and once had a valuation of 32,000 million dollars, has caused havoc in the sector after its rapid collapse after many users rushed to withdraw their funds amidst of information that cast doubt on the solvency of the company.

Its founder, Sam Bankman-Fried, is accused by the United States authorities of multiple crimes, of which he has pleaded not guilty before a federal court in New York, where he arrived after being extradited from the Bahamas, where he resided and had his headquarters. your company.

The 30-year-old is now under house arrest at his parents’ house after agreeing to an unprecedented $250 million bail; From there, he continues to defend his activity and criticize the fact that FTX was forced into bankruptcy and the way the process is being managed.

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