Banks Must Seek Approval for Crypto Activities, Says New York Regulator

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(Bloomberg) – Banks must seek and obtain pre-approval before engaging in cryptocurrency-related activities, and those already engaging in such activities must notify the agency immediately, the Department said. New York Financial Services.

For banks already active in crypto, the department will seek further information and impose requirements as needed, it said in a statement Thursday. The guidelines also apply to banks that use a third party to conduct crypto-related activities. As part of its review, the New York regulator said it would assess several areas, including the banks’ business plan, risk management, corporate governance and consumer protection.

Today’s guidance is essential to ensuring that consumers’ hard-earned money is protected, that New York’s regulated banking organizations remain resilient and competitive, and that expectations are clear for those wishing to submit business proposals. virtual currency activity, Superintendent Adrienne Harris said. in the statement.

Banks with crypto-related businesses or partnerships with digital asset companies have come under greater scrutiny following the collapse of FTX. After the company went bankrupt, it was revealed that the crypto exchange and its sister company Alameda Research had ties to a number of banks, some of them regulated in the United States.

Federal banking regulators, including the U.S. Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp., issued similar guidelines to New York’s DFS requiring the banks they supervise to notify and obtain their approval before engaging in crypto activities. . Democratic Senators Elizabeth Warren and Tina Smith recently called on the heads of the OCC, Fed and FDIC to conduct a thorough review of crypto firms’ ties to the banking industry in the wake of the FTX meltdown. .

We are writing to express our concern over recent revelations of links between the banking industry and cryptocurrency companies, US senators said in letters sent earlier this month.

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