The New York State Department of Financial Services (NYDFS) has released new guidelines requiring companies involved in virtual currency activities to have strong policies and procedures in place to address customer service requests and complaints promptly.
The directive, issued by Superintendent Adrienne Harris, emphasizes the need for virtual currency entities (VCEs) to provide consumers with a transparent and timely resolution process. VCEs include companies that hold New York’s BitLicense and limited purpose trust companies under New York Banking Law, covering licensed cryptocurrency businesses in the state.
Superintendent Harris highlighted that the guidelines aim to ensure a positive customer experience for both consumers and businesses. She stated, “Consumers have the right to a transparent and timely process for resolving complaints and answering questions, regardless of the company or product in question.” The guidance is part of the VOLT initiative, which aims to strengthen the regulator’s oversight of the virtual currency sector.
According to the guidelines, VCEs must offer accessible channels such as phone, email, or chat for customers to submit complaints and service requests. These firms are also required to provide regular updates to customers on the status of their inquiries, including estimated timelines for resolution.
Furthermore, NYDFS is demanding that VCEs conduct a quarterly analysis of received requests and complaints, which will be subject to regulatory scrutiny. Firms must also submit their related policies and procedures for review by NYDFS before November 1, 2024.
NYDFS has been proactive in regulating the cryptocurrency sector in New York, implementing the BitLicense regime in 2015. This regulation has led to various companies, including Coinbase Inc., Circle Internet Financial, LLC, and Robinhood Crypto, obtaining virtual currency licenses. However, the stringent regulations have also caused some companies to exit the New York market.
The statement from NYDFS notes that the information provided in the guidelines is not exhaustive and may be updated to address new information or changes in the market. The guidance is also not intended to limit the applicability of any existing laws or regulations.
This regulatory tightening follows extensive research by NYDFS, which included consultations with key stakeholders. Superintendent Harris has previously dismissed theories suggesting a coordinated effort by U.S. regulators to isolate the cryptocurrency industry from the banking system, calling such claims “ludicrous” and “silly.”
In a related development, New York Attorney General Letitia James has pledged to increase regulatory enforcement against non-compliant crypto companies. This commitment was demonstrated through a recent $2 billion settlement with crypto lender Genesis over allegations of misleading investors about its Gemini Earn program, resulting in significant financial losses.
This settlement, announced by James, is the largest of its kind in New York’s legal history and requires Genesis to return the fraudulently obtained funds and cease operations in New York.
Since her election in 2018, Attorney General James has been proactive in overseeing the crypto market, launching several crackdowns to ensure that cryptocurrency businesses comply with established financial regulations.
NYDFS has also imposed over $177 million in penalties against cryptocurrency companies that have failed to comply with the law. James reiterated her stance on regulatory compliance, stating, “Crypto companies must adhere to the same rules as everyone else. We will take action against those who don’t.”
The evolving regulatory landscape in New York demonstrates the state’s commitment to creating a secure and compliant environment for cryptocurrency transactions, reflecting the increasing scrutiny and regulatory demands faced by the crypto industry as a whole.
