New York Banks Now Need Approval Before Engaging with Crypto, Regulator Says

Per the guidance, which goes into effect immediately, banks must submit a business plan including a risk assessment and the costs and revenue targets associated with the crypto activity

article-image

DALL-E modified by Blockworks

share

A New York financial regulator wants advanced notice before banks do anything involving digital assets. 

The New York State Department of Financial Services issued new guidance requiring state-regulated banks to apply for approval before engaging in digital-asset related activities Thursday. 

Per the guidance, which goes into effect immediately, banks must submit a business plan including a risk assessment and the costs and revenue targets associated with the crypto activity, among other requirements. 

All information needs to be submitted at least 90 days in advance of any planned crypto-related activity, and the regulator will assess whether or not the activity should be permitted. 

“As the virtual currency market evolves, and as New York-regulated institutions continue to innovate, the Department expects to thoroughly assess a Covered Institution’s proposed virtual currency-related activity for safety and soundness,” the regulator wrote in Thursday’s letter.

Failure to comply with the guidelines will result in normal enforcement matters, a person familiar with the matter said. Past enforcement actions include a $30 million penalty on Robinhood Crypto LLC for violating anti-money laundering, cybersecurity and consumer protection requirements. 

The guidance applies to all “banking organizations,” the regulator said, which includes trust companies, savings and loan associations and credit unions. The regulator includes trading and custody services in its definition of “virtual currency-related activity.”

Covered institutions that must adhere to the new guidelines include the Bank of New York Mellon, which historically has been a crypto-friendly firm. The oldest bank in America launched a bitcoin and ether custody product for certain institutional clients in October. 

The Federal Deposit Insurance Corporation issued similar guidance on the national level in April when it required all backed institutions to submit information about planned or current crypto activity.

 “While the FDIC supports innovations that are safe and sound, in compliance with laws and regulations, and fair to consumers, the FDIC is concerned that crypto assets and crypto–related activities are rapidly evolving, and risks of this area are not well understood given the limited experience with these new activities,” the agency wrote in an April statement.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

recent research

dydx unlimited.png

Research

dYdX Unlimited is a revamp to the protocol's design and tokenomics.