{"id":44335,"date":"2023-01-24T12:12:23","date_gmt":"2023-01-24T16:12:23","guid":{"rendered":"https:\/\/coinscreed.com\/staging\/?p=44335"},"modified":"2023-01-24T12:12:26","modified_gmt":"2023-01-24T16:12:26","slug":"new-york-releases-new-guidelines-for-crypto-custodial-structure","status":"publish","type":"post","link":"https:\/\/coinscreed.com\/staging\/new-york-releases-new-guidelines-for-crypto-custodial-structure\/","title":{"rendered":"New York releases new guidelines for crypto custodial structure"},"content":{"rendered":"\n<h5 class=\"wp-block-heading\" id=\"h-new-york-department-of-financial-services-dfs-issued-regulatory-recommendations-on-january-23-2023-to-better-safeguard-consumers-in-the-case-of-virtual-currency-insolvency-although-not-mandatory-the-advice-nonetheless-has-persuasive-power\">New York<a href=\"https:\/\/coinscreed.com\/staging\/new-york-state-dfs-releases-guidance-for-issuing-dollar-backed-stablecoins.html\" target=\"_blank\" rel=\"noreferrer noopener\"> Department of Financial Services (DFS)<\/a> issued regulatory recommendations on January 23, 2023, to better safeguard consumers in the case of virtual currency insolvency. Although not mandatory, the advice nonetheless has persuasive power.<\/h5>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/01\/GlX5fgbo-shutterstock_1095333683-1024x1024.jpg\" alt=\"New York releases new guidelines for crypto custodial structure\" class=\"wp-image-44338\" srcset=\"https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/01\/GlX5fgbo-shutterstock_1095333683-1024x1024.jpg 1024w, https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/01\/GlX5fgbo-shutterstock_1095333683-300x300.jpg 300w, https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/01\/GlX5fgbo-shutterstock_1095333683-150x150.jpg 150w, https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/01\/GlX5fgbo-shutterstock_1095333683-768x768.jpg 768w, https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/01\/GlX5fgbo-shutterstock_1095333683-400x400.jpg 400w, https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/01\/GlX5fgbo-shutterstock_1095333683-1536x1536.jpg 1536w, https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/01\/GlX5fgbo-shutterstock_1095333683-96x96.jpg 96w, https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/01\/GlX5fgbo-shutterstock_1095333683-75x75.jpg 75w, https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/01\/GlX5fgbo-shutterstock_1095333683-350x350.jpg 350w, https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/01\/GlX5fgbo-shutterstock_1095333683-750x750.jpg 750w, https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/01\/GlX5fgbo-shutterstock_1095333683-1140x1140.jpg 1140w, https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/01\/GlX5fgbo-shutterstock_1095333683.jpg 1600w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">New York releases new guidelines for crypto custodial structure<\/figcaption><\/figure>\n\n\n\n<p>The guidelines are applicable to organizations that New York DFS has granted a license or chartered to manage virtual currency assets on behalf of their clients. Virtual currency entities (VCEs), which are these handling entities, are anticipated to have thorough procedures in place that are comparable to those of conventional financial service providers.<\/p>\n\n\n\n<p>According to <a href=\"https:\/\/coinscreed.com\/staging\/new-york-proposes-to-charge-crypto-companies-for-regulating-them.html\" target=\"_blank\" rel=\"noreferrer noopener\">New York virtual currency regulation<\/a>, VCEs must generally:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Maintain virtual currency in a way that safeguards client investments.<\/li>\n\n\n\n<li>Keep meticulous records and books.<\/li>\n\n\n\n<li>disclose in a proper manner the important terms and conditions related to their goods and services, including custody services.<\/li>\n\n\n\n<li>Avoid making any assertions or omissions in their marketing materials that are untrue, misleading, or deceptive.<\/li>\n<\/ul>\n\n\n\n<p>The new regulatory guideline on insolvency covers the following major issues, each of which is covered in further detail below:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Segregation of and Separate Accounting for Customer Virtual Currency<\/strong>: Both on-chain and on the VCE Custodian's internal ledger accounts, the VCE Custodian should independently account for and segregate customer <a href=\"https:\/\/www.google.com\/search?q=New+York+releases+new+guidelines+for+crypto+custodial+structure&oq=New+York+releases+new+guidelines+for+crypto+custodial+structure&aqs=chrome..69i57.783j0j9&sourceid=chrome&ie=UTF-8\" target=\"_blank\" rel=\"noreferrer noopener\">virtual currency<span class=\"wpil-link-icon\" title=\"Link goes to external site.\" style=\"margin: 0 0 0 5px;\"><svg width=\"24\" height=\"24\" style=\"height:16px; width:16px; fill:#000000; stroke:#000000; display:inline-block;\" viewBox=\"0 0 24 24\" version=\"1.1\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" xmlns:svg=\"http:\/\/www.w3.org\/2000\/svg\"><g id=\"wpil-svg-outbound-7-icon-path\" fill=\"none\" clip-path=\"url(#clip0_31_188)\">\r\n                            <path d=\"M9.16724 14.8891L20.1672 3.88908\" stroke-linecap=\"round\"\/>\r\n                            <path d=\"M13.4497 3.53554L20.5208 3.53554L20.5208 10.6066\" stroke-linecap=\"round\" stroke-linejoin=\"round\"\/>\r\n                            <path d=\"M17.5 13.5L17.5 16.26C17.5 17.4179 17.5 17.9968 17.2675 18.4359C17.0799 18.7902 16.7902 19.0799 16.4359 19.2675C15.9968 19.5 15.4179 19.5 14.26 19.5L7.74 19.5C6.58213 19.5 6.0032 19.5 5.56414 19.2675C5.20983 19.0799 4.92007 18.7902 4.73247 18.4359C4.5 17.9968 4.5 17.4179 4.5 16.26L4.5 9.74C4.5 8.58213 4.5 8.0032 4.73247 7.56414C4.92007 7.20983 5.20982 6.92007 5.56414 6.73247C6.0032 6.5 6.58213 6.5 7.74 6.5L11 6.5\" stroke-linecap=\"round\"\/>\r\n                        <\/g>\r\n                        <defs>\r\n                            <clipPath id=\"clip0_31_188\">\r\n                                <rect fill=\"white\" height=\"24\" width=\"24\"\/>\r\n                            <\/clipPath>\r\n                        <\/defs><\/svg><\/span><\/a> from the corporate assets of the VCE Custodian and its related organizations.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>VCEs' limited interest<\/strong>: According to DFS, when a customer gives a VCE Custodian custody of an asset for safekeeping, the VCE Custodian will only use the asset for the specific purpose of providing custody and safekeeping services; it won't use it to create a debtor-creditor relationship with the customer.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Sub-custody Arrangements<\/strong>: A VCE Custodian may decide to work with a third party to set up a sub-custody agreement for the safeguarding of customer virtual currency after doing the necessary due diligence, provided that the arrangement complies with the guidelines and is authorized by DFS.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Customer Disclosure<\/strong>: The VCE Custodian is required to make full disclosure of the general terms and conditions of its products, services, and activities to each client. This disclosure must include information about how the VCE Custodian separates and accounts for the virtual currency held in custody as well as the customer's retained property interest in the virtual currency. The parties' wishes to enter into a custodial relationship rather than a debtor-creditor relationship should be made explicit in the customer agreement for the <a href=\"https:\/\/coinscreed.com\/staging\/standard-custody-becomes-custodian-for-blockchaincom.html\" target=\"_blank\" rel=\"noreferrer noopener\">VCE Custodian<\/a>.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>New York Department of Financial Services (DFS) issued regulatory recommendations on January 23, 2023, to better safeguard consumers in the case of virtual currency insolvency. Although not mandatory, the advice nonetheless has persuasive power. The guidelines are applicable to organizations that New York DFS has granted a license or chartered to manage virtual currency assets [&hellip;]<\/p>\n","protected":false},"author":38,"featured_media":44338,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[132,1811],"class_list":["post-44335","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-crypto","tag-new-york"],"jetpack_featured_media_url":"https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2023\/01\/GlX5fgbo-shutterstock_1095333683.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts\/44335","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/comments?post=44335"}],"version-history":[{"count":0,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts\/44335\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/media\/44338"}],"wp:attachment":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/media?parent=44335"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/categories?post=44335"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/tags?post=44335"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}