Home News Companies Should Separate Clients’ Crypto Assets From Their Own: NYDFS

Companies Should Separate Clients’ Crypto Assets From Their Own: NYDFS


The New York State Department of Financial Services (NYDFS) urged firms to set apart customers’ cryptocurrency holdings from their own assets.

The watchdog argued that co-mingling funds could trigger a significant financial loss for investors.

The NYDFS’ Recommendation

New York’s financial watchdog issued guidance to state-regulated companies on how they should better protect clients in the event of potential insolvency. It outlined the increasing interest in cryptocurrencies over the past few years and insisted that entities should maintain enhanced control of their customers’ holdings. The agency also believes the market needs to function under an appropriate regulatory framework:

“As stewards of others’ assets, virtual currency entities (VCE) that act as custodians play an important role in the financial system and, therefore, a comprehensive and safe regulatory framework is vital to protecting customers and preserving trust.”

The NYDFS urged organizations to keep consumers’ crypto possessions separate from other assets. “It is expected that a VCE Custodian will not co-mingle customer virtual currency with any of the VCE Custodian’s own virtual currency or with any other non-customer virtual currency,” the department…

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