New York Banks Now Must Seek Prior Approval Before Engaging in Cryptocurrency Activity

After the FTX scandal, New York is ratcheting up scrutiny on banks that deal in cryptocurrencies.

Wide shot of NY stock exchange with American flags out front
The guidelines will take place effective immediately. (Photo by Spencer Platt/Getty Images)

Any New York banking organization interested in engaging in cryptocurrency activity must now seek approval 90 days beforehand, according to new guidelines from the New York Department of Financial Services (NYDFS).

Meanwhile, banks that have already become involved with crypto assets are required to immediately notify the department, which will examine the activity and potentially impose further supervisory requirements.

In order to obtain prior approval, banking institutions will have to submit business plans and operating models, even if the crypto activity is being done via a third party. The department’s guidelines also ask for a comprehensive risk assessment and information regarding the targeted customer base.

“Today’s Guidance is critical to ensuring that consumers’ hard-earned money is protected, that New York regulated banking organizations remain resilient and competitive, and that the expectations are clear for those that wish to submit proposals for virtual currency-related activity,” said Adrienne Harris, NYDFS superintendent, in a statement.

New York Banks Now Must Seek Prior Approval Before Engaging in Cryptocurrency Activity