The New York State Department of Financial Services (NYDFS) urged firms to set apart customers’ cryptocurrency holdings from their own assets.
The watchdog argued that co-mingling funds could trigger a significant financial loss for investors.
“As stewards of others’ assets, virtual currency entities (VCE) that act as custodians play an important role in the financial system and, therefore, a comprehensive and safe regulatory framework is vital to protecting customers and preserving trust.”
The NYDFS urged organizations to keep consumers’ crypto possessions separate from other assets. “It is expected that a VCE Custodian will not co-mingle customer virtual currency with any of the VCE Custodian’s own virtual currency or with any other non-customer virtual currency,” the department added.
They should also release records and maintain a “clear internal audit trail” to identify people about any transactions involving their ownings.