New York State Reveals Another Improvement To Its Capability To Monitor Virtual Currencies

Key Points:

• The New York State Department of Financial Services (NYDFS) has made improvements to its capacity to spot fraudulent activity involving virtual currency among the organizations it regulates.
• Unspecified new technology capabilities are frequently announced, according to the NYDF enforcement playbook.

The New York State Department of Financial Services (NYDFS) has made improvements to its capacity to spot fraudulent activity involving virtual currency among the organizations it regulates. According to the company, the additional capabilities are a part of its attempts to stay on top of the market and react quickly to the virtual currency space.

On February 21, the NYDFS issued a brief statement outlining its new capabilities but left out any information regarding the “new insider trading and market manipulation risk monitoring tools.” However, the pledge was as follows:

“The new enhancements will provide the Department with additional capabilities to detect potential insider trading, market manipulation, and front-running activity associated with Department-regulated entities’ and applicants’ exposure or potential exposure to listed virtual currency wallet addresses.”

“These capabilities will help us battle financial crime and fraud, hold regulated firms responsible, and further reinforce our national leadership in virtual currency supervision,” said NYDFS Superintendent Adrienne Harris.

Unspecified new technology capabilities are frequently announced, according to the NYDFS enforcement playbook. After Russia invaded Ukraine, the agency declared “expedited procurement of more blockchain analytics technology” last year as part of its implementation of sanctions against those companies.

The organization also frequently provides instructions for the organizations it oversees, advising banks on using cryptocurrencies in December and claiming to be the first regulator to publish stablecoin issuing standards in June.

After opening an investigation into the coin, Paxos Trust, a blockchain infrastructure platform, recently decided to suspend minting the Binance USD stablecoin with the help of the NYDFS. It forced Coinbase to pay it $100 million earlier this year as compensation for allegedly holding a backlog of 100,000 suspicious transaction warnings. It and Robinhood Crypto came to an agreement in August for a $30 million fine for violations of anti-money laundering compliance.

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