NYDFS to require prior notification for banks engaging in crypto activities

The New York Department of Financial Services has issued guidance—effective today—for New York-regulated banks reminding them of their obligations to seek prior approval before engaging in activities related to virtual currencies, including when engaging with a third party to perform such activities. The department noted that institutions already engaged in virtual currency-related activities should promptly notify NYDFS.

In considering requests from banks, NYDFS will consider the institution’s business plan, risk management, corporate governance and oversight, consumer protection, financials and legal and regulatory analysis, according to the guidance. Institutions should notify NYDFS of its intention a minimum of 90 days prior to commending the activity, and the department will work with the institution to identify the materials needed to conduct its review.

The guidance also includes a supplemental checklist of materials that may be relevant in evaluating a proposed virtual currency-related activity to help institutions prepare a written submission.