The New York State Department of Financial Services (DFS) has issued a new guidance requiring the holders of a BitLicense or a Money Transmitter License to ramp up their security measures for detection of fraud and be vigilant against market manipulation.
In the document the DFS informs the holders of such licenses that they must adopt measures that include, at a minimum, effective implementation of a written policy that identifies and assesses the full range of risks, including fraud and market manipulation, provide procedures and controls against those risks. Furthermore, the cryptocurrency exchanges must allocate responsibility for monitoring risks and provide investigation for actual or suspected fraud and/or market manipulation. The companies must also submit to DFS reports on the investigations and their findings.
“DFS took the lead in 2015 in regulating the virtual currency market, and we continue to be vigilant concerning risks in these markets. Market manipulation presents serious risks, both to consumers and to the safety and soundness of financial services institutions,” said Superintendent Maria Vullo. “As the cryptocurrency markets continue to evolve, DFS is directing virtual currency companies to take the necessary steps to guard against fraud, and to be extra vigilant about manipulation. By these actions, the market can evolve with strong regulatory supervision.”
The so-called New York BitLicense was introduced in 2015, much to the chagrin of the cryptocurrency industry. At the time it was described as “difficult and costly” to obtain. The regulations are limited to activities involving New York (place of business or conducting business in the State of New York) or a New York resident.
Currently there are six holders of the New York BitLicense: bitFlyer, Coinbase, XRP II (the company behind the Ripple blockchain and the Ripple coin), Circle Internet Financial, Gemini Trust Company and itBit Trust Company.