The New York Department of Financial Services, or NYDFS, has released guidelines on how licensed crypto firms should handle customer assets should they face \u201cinsolvency or similar proceeding\u201d.<\/p>\n
In a Jan. 23 announcement, NYDFS superintendent Adrienne Harris said crypto firms and exchanges operating under a BitLicense \u2014 required in New York state \u2014 should segregate corporate funds from users\u2019 virtual currency holdings both on-chain and in the \u201cinternal ledger accounts\u201d of the company\u2019s custodian. According to the regulator, crypto firms are expected to hold users\u2019 assets \u201conly for the limited purpose of carrying out custody and safekeeping services\u201d:<\/p>\n
\u201cA [virtual currency entity\u2019s] customer agreement should make clear the parties\u2019 intentions to enter into a custodial relationship, rather than a debtor-creditor relationship.\u201d<\/p><\/blockquote>\n
In addition to these guidelines, NYDFS added that all licensed firms custodying assets should \u201cmaintain appropriate books and records\u201d as well as disclose information related to its products and services in terms and conditions available to customers. Harris said the guidance was aimed at the \u201csafekeeping of customer assets\u201d.<\/p>\n
The announcement followed several crypto exchanges based in the United States filing for Chapter 11 bankruptcy protection after some reported liquidity issues, including FTX, BlockFi, Voyager Digital, and Genesis. Many former customers of the crypto firms have not been made whole amid bankruptcy proceedings. <\/p>\n