New york department of financial services (nydfs) issued an open letter outlining how customer assets should be handled. this letter was applicable to companies that hold a bitlicense, a business license issued by new york since 2015 for digital asset activities. federal prosecutors in new york are also investigating the collapse of ftx, an exchange formerly led by sam bankman-fried.
Nydfs issued the open letter in may 2019. the letter was applicable to companies that hold a bitlicense in the state of new york. kraken’s ceo jesse powell pulled the company out of new york state in 2015 due to the stringent regulations in the state. powell was still vocal about the economic damage caused by the bitlicense, estimating it to be in the billions of dollars.
Open letter outlined how customer assets should be handled. these guidelines are applicable to companies that hold a bitlicense, a business license issued by new york since 2015 for digital asset activities. asset custodians must have similar processes in place as traditional financial service providers. digital assets belonging to customers must be kept separate from those held by the custodian, both on-chain and in the custodian’s internal books. custodians must provide customers with written disclosures that explain the arrangements for how the assets are segregated and accounted for. the nydfs asserted that assets held by custodians should only be kept for safekeeping and that no debtor-creditor relationship is established when the possession of digital assets is transferred. to develop the new guidelines, the agency conducted an extensive analysis of the current regulatory landscape, studied market trends, and consulted with industry players and other state and federal regulators. the new guidelines from the nydfs further explain how digital assets should be handled, including the need to keep digital assets belonging to customers separate from those held by the custodian.
