New York Regulator’s Crypto Guide for Banks – Finally on the Hook?
Crypto trading has found its way into the mainstream sectors today. Many financial institutions are now interested in participating in crypto trading today. While many public companies have openly declared that they trade Bitcoin (BTC), a lot today do so secretly for fear of government sanctions. The banks too have become no exceptions to this also.
The tendency of financial institutions to mingle customers’ funds while participating in cryptocurrency trading has alarmed the various regulatory authorities today. These regulatory bodies have been quick to outline new policies to guide financial institutions in their involvement with all forms of cryptocurrency trading. Some countries have outrightly banned commercial banks from involving in any form of cryptocurrency transactions.
The New York’s Department of Financial Services has mandated all the banks within the state to ensure they obtain approvals before proceeding to trade crypto. This would require them to submit their business plan for indulging in cryptocurrency trading 90 days ahead of time.
Can the New banks meet up with this demand and still participate in cryptocurrency trading given the volatile nature of cryptos? Is this another way of prohibiting the New banks from crypto trading today? This work will help you learn more about the hook the New York banks have been placed into today.
Role of New York Regulators in the financial market today
The major Financial Market Regulator in New York today is known as the New York’s Department of Financial Services (DFS), this body issues operating licenses to all financial service providers within the state and scrutinizes all their activities to ensure they conform with the standards. One major concern of this body is to ensure that all the deposited funds with these financial service providers are secure and well accounted for at each point in time.
Understanding the New York’s regulatory Crypto Guide for State Banks today
The tendency of some financial institutions to misappropriate customers’ funds when left to participate in crypto trading has led many regulatory authorities across the country to develop new laws to guide banks in their involvement with cryptocurrency trading today.
Recently, the New York Banking Regulators have disclosed a new law to guide all banks within the states in their involvement with cryptocurrency trading in the future.
Here, the New York State Department of Financial Services (NYDFS) mandated all banks to ensure that they submit to the body a business plan describing the nature of their intended involvement with crypto trading at least 90 days ahead, before they can carry on with such business.
This requested business plan is expected to contain a full description of the intended transactions, how the business would affect the bank’s capital and liquidity, and how it intends to manage the risk from such business. This must be submitted to the regulator at least 90 days ahead.
Speaking further on this, the Superintendent for the NYDFS – Adrienne Harris stated clearly that this policy was necessary to ensure that the consumers’ hard-earned money deposited with the bank is well protected and that the banks remain competitive.
What impact will this new policy have on New York’s banks’ involvement in Crypto trading today?
The new policy which now requires the banks to submit their business plan 90 days ahead whenever they wish to indulge in cryptocurrency trading in the future is a very restrictive policy. The large expanse of time required for obtaining the required approval will likely deter many banks from participating easily in cryptocurrency trading in the future. This is because all crypto assets are very volatile and require prompt decision-making when it comes to buying and selling them.