{"id":9953,"date":"2023-01-24T00:15:40","date_gmt":"2023-01-24T00:15:40","guid":{"rendered":"https:\/\/cryptoheretostay.com\/?p=9953"},"modified":"2023-01-24T00:15:41","modified_gmt":"2023-01-24T00:15:41","slug":"nydfs-releases-guidance-on-importance-of-segregation-and-separate-accounting-for-customer-funds-in-crypto-industry","status":"publish","type":"post","link":"https:\/\/cryptoheretostay.com\/?p=9953","title":{"rendered":"NYDFS Releases Guidance on Importance of Segregation and Separate Accounting for Customer Funds in Crypto Industry"},"content":{"rendered":"<p> <script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"crypto\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<\/p>\n<p><strong>On Monday, the New York Department of Financial Services (NYDFS) published guidance on custodial structures to help protect customers\u2019 money if a crypto firm goes bankrupt. New York\u2019s top financial regulator stressed that businesses should not commingle customer funds and that customer funds should be segregated with separate accounting.<\/strong><\/p>\n<h2>FTX Collapse Prompts NYDFS to Issue Guidance on Virtual Currency Custodian Regulations<\/h2>\n<p>Following the recent collapse of FTX and allegations directed at its co-founder, Sam Bankman-Fried, and top deputies, the New York Department of Financial Services (NYDFS) released guidance detailing that customer assets held by a virtual currency business must be segregated.<\/p>\n<p>The guidance was issued by Adrienne Harris, the superintendent of the NYDFS, and the regulator insists that virtual currency custodians need to apply a \u201csafe regulatory framework\u201d to protect customers and preserve trust. The NYDFS guidance provides a summary of four different policies and standards that virtual currency entities (VCEs) should adhere to. The four policies are as follows:<\/p>\n<p>Segregation of and Separate Accounting for Customer Virtual Currency;<br \/>\nVCE Custodian\u2019s Limited Interest in and Use of Customer Virtual Currency;<br \/>\nSub-Custody Arrangements; and<br \/>\nCustomer Disclosure.<\/p>\n<p>\u201cTo custody customer virtual currency properly and maintain appropriate books and records, a VCE custodian is expected to separately account for and segregate customer virtual currency from the corporate assets of the VCE custodian and its affiliated entities, both onchain and on the VCE custodian\u2019s internal ledger accounts,\u201d the New York regulator details.<\/p>\n<p>The regulator further said that custodians should have limited interest in customer funds and in the use of a client\u2019s virtual assets. \u201cWhen a customer transfers possession of an asset to a VCE custodian for the purposes of safekeeping, the department expects that the VCE custodian will take possession only for the limited purpose of carrying out custody and safekeeping services,\u201d the NYDFS guidance explains.<\/p>\n<p>Tags in this story<\/p>\n<p>accounting, Affiliated entities, Allegations, Businesses, code of conduct, collapse, Commingle, Compliance, Corporate assets, crypto firm, Custodial structures, customer assets, Customer disclosure, Customer Funds, customer protection, Expectations, financial regulator, ftx, Governance, Guidance, guidelines, Insolvency, Internal ledger accounts, jurisdiction, legal framework, Limited interest, New York regulator, NYDFS, Onchain, Oversight, policy, Regulations, restrictions, Safekeeping, Sam Bankman-Fried, sbf, Segregated, Standards, Statutes, Sub-custody arrangements, supervision, VCE custodian, virtual assets, Virtual Currency<\/p>\n<p><em><strong>What are your thoughts on the NYDFS\u2019s guidance on custodial structures for customer protection in the event of a crypto firm\u2019s insolvency? Share your thoughts about this subject in the comments section below.<\/strong><\/em><\/p>\n<p>Jamie Redman <\/p>\n<p class=\"article__body__author__info__about\">\nJamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.<\/p>\n<p><i class=\"td-icon-font td-icon-twitter\"\/><\/p>\n<p class=\"images_credits\"><em>Image Credits: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n<p>More Popular NewsIn Case You Missed It<\/p>\n<p><script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"bitcoin\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<br \/><a href=\"https:\/\/news.bitcoin.com\/nydfs-releases-guidance-on-importance-of-segregation-and-separate-accounting-for-customer-funds-in-crypto-industry\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>On Monday, the New York Department of Financial Services (NYDFS) published guidance on custodial structures to help protect customers\u2019 money if a crypto firm goes bankrupt. New York\u2019s top financial regulator stressed that businesses should not commingle customer funds and that customer funds should be segregated with separate accounting. FTX Collapse Prompts NYDFS to Issue [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":9954,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_wp_rev_ctl_limit":""},"categories":[1],"tags":[],"class_list":["post-9953","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto-updates"],"_links":{"self":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/9953","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9953"}],"version-history":[{"count":1,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/9953\/revisions"}],"predecessor-version":[{"id":9955,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/9953\/revisions\/9955"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/media\/9954"}],"wp:attachment":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9953"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9953"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9953"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}