The New York Department of Financial Services (NYDFS) recently released updated regulations for virtual currency (coin) listings and delistings. These regulations apply to Bitlicensees and limited-purpose trust companies and introduce new requirements for virtual currency entities (VCEs), including advance notification, updated risk assessment expectations, and business model considerations.
VCE Coin-Listing Policies
According to the latest guidance, VCEs with prior approvals for coin-listing policies must now obtain NYDFS approval for both their coin-listing and coin-delisting policies before self-certifying any coins. Once both policies are approved, VCEs can self-certify coins for activities in New York. However, VCEs without NYDFS-approved listing policies will be limited to listing coins on the NYDFS Greenlist, unless they receive specific approvals. The NYDFS also has discretionary authority to require VCEs to delist coins or restrict access for New Yorkers to non-Greenlist coins.
Coin-Listing Governance Requirements
VCEs are now required to actively involve their board of directors or equivalent governing authority in the oversight of coin-listings. This includes annual approvals of the coin-listing policy, decision-making on new coin listings, and ensuring independence from those proposing coin listings or delistings. VCEs must also manage and disclose any conflicts of interest, maintain compliant recordkeeping accessible for NYDFS review, and promptly notify the NYDFS of any non-compliance or material changes to their coin-listing policy.
The governing authority must also reassess the coin-listing policy annually to ensure ongoing risk mitigation and maintain independence from the initial recommendation process for listing or delisting coins. The NYDFS expects that this enhanced governance framework will strengthen risk management and regulatory compliance among VCEs.
Coin-Listing Risk Assessment Requirements
The NYDFS has provided specific guidance on the risk assessment expectations for VCEs. VCEs must now assess various risks, including technical design and technology, operational, cybersecurity, market and liquidity, illicit finance, legal, reputational, and regulatory risks. VCEs are also required to consider other factors specific to each coin and its uses, and incorporate NYDFS guidance on preventing market manipulation and other wrongful activities.
Additionally, VCEs must identify and mitigate risks related to conflicts of interest by implementing policies and procedures that prevent such conflicts from influencing decisions, recommendations, and assessments. When potential conflicts of interest arise in coin-listing decisions, VCEs must disclose them to the public. VCEs are also responsible for treating all customers fairly and providing them with the full protection of applicable laws and regulations.
Limits of VCE Self-Certification
The new guidance sets strict requirements for VCEs self-certifying coins. Coins that are used to circumvent laws or conceal identities are ineligible for self-certification. Restrictions also apply to non-Greenlist stablecoins, exchange coins, coins on protocols with decentralization concerns or significant concentration risks, bridged coins, and coins with less than 35% circulating supply. VCEs must seek NYDFS approval for listing such coins and provide a comprehensive risk assessment and business use case.
VCE Coin Monitoring
VCEs must establish robust monitoring policies for self-certified coins to ensure compliance with safety, customer protection, and regulatory standards. These policies should include annual re-evaluations, risk management controls, and a clear coin-delisting policy. VCEs are expected to follow the NYDFS's guidance on blockchain analytics and comply with regulations related to the Bank Secrecy Act, anti-money laundering, and sanctions.
VCE Coin Delisting Requirements
The new guidance also clarifies the NYDFS's expectations for coin delistings by VCEs. VCEs must be prepared to discontinue support for coins that pose elevated risks, prioritizing the safety and soundness of customers and the public.
Coin-delisting policies must be comprehensive and reflect various aspects of the VCE's business model, operations, customer base, operational geographies, service providers, and coin characteristics. However, limited exceptions may be granted with NYDFS approval. VCEs were required to meet with the NYDFS by December 8, 2023, to discuss draft coin-delisting policies, and final policies are due by January 31, 2024.
Within the coin delisting requirements, there are two subcategories: governance and policy.
Delisting Governance Requirements
VCEs must obtain approval from their governing authority for coin-delisting policies, conduct annual reviews for effective risk management, and maintain independence from those recommending coin listings or delistings. Accurate records must be kept and made available for NYDFS review. VCEs must notify the NYDFS in writing at least ten business days before delisting a coin, providing a rationale and timeline for the delisting. Significant changes to coin-delisting policies require written approval from the NYDFS.
Delisting Policy Requirements
Coin-delisting policies must outline the delisting process, including criteria thresholds for delisting and integration with the VCE's monitoring procedures. VCEs should regularly review and update these procedures in response to new findings, legal or regulatory changes, or NYDFS directives. Roles and responsibilities should be established for each type of trigger event to ensure clear instructions for stakeholders.
Key elements of executing a delisting event include providing at least 30 days' advance notice to customers (unless otherwise directed by NYDFS), addressing customer questions and assisting with the sale of impacted coins, documenting all aspects of the delisting decision, ongoing monitoring for safety and soundness, and assessing the impact on operations, counterparties, and service providers.
Conclusion
The NYDFS's new virtual currency guidance introduces stricter regulations for VCEs in New York. These regulations aim to enhance governance, risk assessment, and compliance among VCEs, ultimately ensuring the safety and protection of customers and the public. VCEs must now obtain NYDFS approval for coin-listing and coin-delisting policies, actively involve their governing authority in the oversight of coin-listings, and assess various risks associated with virtual currencies. By complying with these regulations, VCEs can continue to operate in New York's virtual currency landscape.
What are your thoughts on the new virtual currency guidance from the NYDFS? Share your opinions in the comments section below.
Frequently Asked Questions
Should You Invest Gold in Retirement?
This will depend on how much money and whether you were able to invest in gold at the time that you started saving. If you are unsure of which option to invest in, consider both.
Gold is a safe investment and can also offer potential returns. Retirement investors will find gold a worthy investment.
Gold is more volatile than most other investments. Its value fluctuates over time.
But this doesn't mean you shouldn't invest in gold. It just means that you need to factor in fluctuations to your overall portfolio.
Another benefit to gold is its tangible value. Gold is more convenient than bonds or stocks because it can be stored easily. It can also be carried.
As long as you keep your gold in a secure location, you can always access it. There are no storage charges for holding physical gold.
Investing in gold can help protect against inflation. Because gold prices tend to rise along with other commodities, it's a good way to hedge against rising costs.
Also, you'll reap the benefits of having some savings invested in something with a stable value. Gold rises in the face of a falling stock market.
Another advantage to investing in gold is the ability to sell it whenever you wish. Like stocks, you can sell your position anytime you need cash. You don't even have to wait until you retire.
If you do decide to invest in gold, make sure to diversify your holdings. Do not put all your eggs in one basket.
Do not buy too much at one time. Start with just a few drops. Continue adding more as necessary.
The goal is not to become rich quick. Instead, the goal is to accumulate enough wealth that you don't have to rely on Social Security.
While gold may not be the best investment, it can be a great addition to any retirement plan.
What is the best way to hold physical gold?
Gold is money and not just paper currency. People have been using gold for thousands of years to store their wealth and protect it from economic instability and inflation. Today, investors use gold as part of a diversified portfolio because gold tends to do better during financial turmoil.
Today, many Americans invest in precious metals such as gold and silver rather than stocks and bonds. Although owning gold does not guarantee that you will make money investing in it, there are many reasons to consider adding gold into your retirement portfolio.
One reason is that gold historically performs better than other assets during financial panics. Gold prices rose nearly 100 percent between August 2011 and early 2013, while the S&P 500 fell 21 percent over the same period. During turbulent market conditions gold was one of few assets that outperformed stock prices.
The best thing about gold investing is the fact that there's virtually no counterparty risk. Even if your stock portfolio is down, your shares are still yours. Gold can be worth more than its investment in a company that defaults on its obligations.
Finally, the liquidity that gold provides is unmatched. This means that, unlike most other investments, you can sell your gold anytime without worrying about finding another buyer. Because gold is so liquid compared to other investments, buying it in small amounts makes sense. This allows you to take advantage of short-term fluctuations in the gold market.
What Should Your IRA Include in Precious Metals?
You should remember that precious metals are not only for the wealthy. You don't have to be rich to invest in them. There are many ways to make money on silver and gold investments without spending too much.
You may consider buying physical coins such as bullion bars or rounds. It is possible to also purchase shares in companies that make precious metals. Your retirement plan provider may offer an IRA rollingover program.
You can still get benefits from precious metals regardless of what choice you make. These metals are not stocks, but they can still provide long-term growth.
Their prices rise with time, which is a different to traditional investments. If you decide to sell your investment, you will likely make more than with traditional investments.
Is gold a good investment IRA?
Anyone who is looking to save money can make gold an excellent investment. It is also an excellent way to diversify you portfolio. But there is more to gold than meets the eye.
It's been used throughout history as a currency, and even today, it remains a popular form of payment. It is often called “the oldest currency in the world.”
But unlike paper currencies, which governments create, gold is mined out of the earth. It's hard to find and very rare, making it extremely valuable.
The supply and demand for gold determine the price of gold. The strength of the economy means people spend more, and so, there is less demand for gold. The result is that gold's value increases.
On the other hand, people will save cash when the economy slows and not spend it. This increases the production of gold, which in turn drives down its value.
This is why it makes sense to invest in gold for individuals and companies. If you make an investment in gold, you can reap the economic benefits whenever the economy is growing.
Additionally, you'll earn interest on your investments which will help you grow your wealth. You won't lose your money if gold prices drop.
Statistics
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
External Links
cftc.gov
finance.yahoo.com
bbb.org
forbes.com
- Gold IRA – Add Sparkle to Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
How To
3 Ways To Invest in Gold For Retirement
It's essential to understand how gold fits into your retirement plan. There are many ways to invest in gold if you have a 401k account at work. You might also be interested to invest in gold outside the workplace. You could, for example, open a custodial bank account at Fidelity Investments if your IRA (Individual Retirement Account) is open. Or, if you don't already own any precious metals, you may want to consider buying them directly from a reputable dealer.
These are the rules for gold investing:
- You can buy gold with your cash – No need to use credit cards or borrow money for investment financing. Instead, put cash into your accounts. This will help protect you against inflation and keep your purchasing power high.
- Physical Gold Coins: You should own physical gold coins, not just a certificate. Physical gold coins are easier to sell than certificates. Physical gold coins are also free from storage fees.
- Diversify your Portfolio. Also, diversify your wealth and invest in different assets. This can reduce market volatility and help you be more flexible.
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By: Guest Author
Title: New York Department of Financial Services Issues New Virtual Currency Guidance
Sourced From: news.bitcoin.com/new-york-offers-new-virtual-currency-guidance/
Published Date: Fri, 22 Dec 2023 08:00:07 +0000
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