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New York’s Crypto Clean-Up: Stricter Guidelines for Listing & Delisting: Report

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In a move aimed at bolstering investor protection, the New York State Department of Financial Services (NYDFS) has announced stricter regulations for cryptocurrency listing and delisting in the state. The guidelines, revealed on November 15, mandate that crypto companies must now seek NYDFS approval for their coin listing and delisting policies.

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Crypto Compliance Mandate

These new measures, effective immediately, signify a significant shift in the oversight of digital currencies within the state. The NYDFS will evaluate company policies against more rigorous risk assessment standards, encompassing technological, operational, cybersecurity, market, liquidity, and illicit activity risks associated with the tokens.

Applicable to all digital currency business entities licensed under the New York Codes, Rules, and Regulation or limited purpose trust companies under the state’s banking law, these regulations have wide-reaching implications. Notably, companies that previously had their coin listing policies approved are now barred from self-certifying any tokens unless they receive explicit approval from the NYDFS.

Prominent players in the cryptocurrency space, including stablecoin issuer Circle, crypto exchange Gemini, fund manager Fidelity, trading platform Robinhood, and payments giant PayPal, are among those required to adhere to the newly implemented guidelines.

To ensure compliance, affected firms must engage with the NYDFS by December 8, 2023. They are expected to preview their draft coin listing and delisting policies during this meeting and subsequently submit them for approval by January 31, 2024.

Innovative Oversight for Crypto Listings

Adrienne Harris, the Superintendent of Financial Services, emphasized that the NYDFS plans to adopt an “innovative and data-driven approach” to supervise coin listings, delistings, and the broader cryptocurrency market.

Harris clarified that the new regulations do not signal a statewide crackdown on the digital asset industry. Instead, the objective is to create a well-regulated environment for New Yorkers to access the virtual currency marketplace while positioning New York at the forefront of technological innovation and progressive regulation.

This move follows the NYDFS’s earlier announcement in February, expanding its capabilities to identify illicit activities related to cryptocurrencies, such as insider trading and market manipulation.

As per an August report by Coinbase, approximately 690 blockchain-based companies are situated in New York, with 19% of New Yorkers reportedly owning digital assets. The state’s commitment to fostering a secure and innovative cryptocurrency ecosystem reflects the growing importance of digital assets in today’s financial landscape.

Related Reading | Bakkt Pivots To Digital Asset Custody

New York Set Forth a Proposal to Charge Crypto Firms for Supervision and Examination

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In order to be able to charge licensed cryptocurrency companies for regulating them, the New York State Department of Financial Services (DFS) has presented a proposal to amend state law.

Although it may seem strange, the DFS frequently charges licensed non-crypto financial entities for the costs and expenses of keeping watch over them in accordance with Financial Services Law (FSL).

The initiative is being led by DFS Superintendent Adrienne Harris, who made the announcement via the DFS website on December 1 and has since made it available for public comment for the next ten days.

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New York Set Forth a Proposal to Charge Crypto Firms for Supervision and Examination 3

New York is eyeing to regulate crypto firms like other financial entities

As FSL did not have a requirement for crypto businesses when crypto regulation was accepted in New York in 2015, Harris is essentially aiming to bring virtual currency businesses into line with other regulated financial firms.

Furthermore, Harris notes that these “regulations will enable the Department to continue building out its virtual currency regulatory team with top talent.”

“Through licensing, supervision, and enforcement, we hold companies to the highest standards in the world. “The ability to collect supervisory costs will help the Department continue protecting consumers and ensuring the safety and soundness of this industry.”

New York Harris stated

The proposal document states that the DFS would assess fees based on the sum of operating costs incurred by overseeing licensees as well as the “proportion deemed just and reasonable” for other operating and overhead costs.

As a result, there is no standard amount that all businesses must pay because the amount of oversight varies. Instead, the total amount due would be divided into five payment periods over the course of the fiscal year.

It is not surprising that regulators are rushing to impose more regulatory oversight after the crypto sector experienced yet another multi-billion dollar implosion, this time as a result of the now-bankrupt FTX, Alameda Research, and former golden boy Sam Bankman-Fried.

Commodity Futures Trading Commission (CFTC) chair Rostin Behnam said that while he believes his organization has the resources to regulate cryptocurrency, there are gaps in the law that need to be filled during a hearing before a U.S. Senate committee on the FTX scandal on December 1.

Cryptocurrency Mining Faces Partial Ban in New York

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Cryptocurrency mining faces another round of scrutiny in New York. As the state strives to strike a balance between its economic development goals and climate goals, New York will impose a two-year moratorium on new fossil fuel-powered cryptocurrency mining operations.

Gov. Kathy Hochul signed the contentious bill into law on Tuesday, putting a temporary halt on new authorizations for fossil fuel power plants that shelter proof-of-work virtual currency mining, which is a step in the exchange of digital currency.

This is a first for the country. On November 8, Hochul was elected to a full term after having delayed action on the matter for months after the Legislature passed the measure in June.

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Cryptocurrency Mining Faces Partial Ban in New York 5

Cryptocurrency miners were attracted to New York

Due to the accessibility of abandoned manufacturing facilities and power plants with unused electrical infrastructure, Upstate New York has grown to be appealing to businesses that “mine” digital currencies like Bitcoin.

Hochul, who is guiding the state toward aggressive climate goals, asserted that the moratorium is a crucial step in preventing enhanced emissions from the industry restarting old power plants.

“I am signing this legislation into law to build on New York’s nation-leading Climate Leadership and Community Protection Act, the most aggressive climate and clean energy law in the nation, while also continuing our steadfast efforts to support economic development and job creation in upstate New York.”

The state Department of Environmental Conservation will conduct a study on the environmental effects of the cryptocurrency mining industry as a result of the new law.

This year, the issue generated intense debate in the state Capitol, with the industry urging Hochul to oppose the legislation and environmental groups urging lawmakers to support it.

Despite its revolutionary steps, the bill has a limited scope. No one buying or mining for cryptocurrencies or engaging in other blockchain-related activities would be impacted, nor would the roughly a dozen state operations that use the grid. In addition, if a business has already submitted paperwork to operate in New York, the moratorium on new or renewed permits does not apply to them.

However, the law has sparked worries in the sector that it will encourage other states to follow suit and harm the sector, which has already experienced a challenging period among investors.

Bitcoin miners push to veto NY Senate’s moratorium

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New York Bitcoin miners are reacting to the adoption of a crypto moratorium measure that, if approved by the governor in the next 10 days, will bar new proof-of-work (PoW) mining facilities using fossil fuel electricity behind the meter from starting shop in the state for two years.

Current ones would likewise be prohibited from expanding their energy consumption under the proposal. The foundry stated,

“As a Rochester-based company committed to growing the city and state’s economy through job creation and economic stimulus, we believe this legislation limits jobs and innovation in New York for the foreseeable future.”

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Greenidge Generation, which has a 106-megawatt facility in Dresden, also issued a statement clarifying that even if the measure is signed into law, the company’s current operations in the state will not be affected.

Greenidge Generation stated that its pending air permit renewal application was filed on March 5, 2021, which has attracted a lot of attention from both environmentalists and crypto enthusiasts in the state. As a result, this bill would have no effect on Greenidge’s New York plant.

Assemblywoman Anna Kelles, the bill’s sponsor, has emphasized the bill’s limited scope, which has been tweaked from a prior form that died in the Assembly last year. In general, it would halt existing levels of carbon emissions in the state for bitcoin mining and only apply to a small number of fossil-fuel power plants. Kelles on the assembly floor said that the bill is not retroactive and that it is only specific to the power plants.

Bitcoin mining inherently bad for the environment?

Bitcoin uses a lot of electricity. That energy demand is increasing, and it now consumes as much energy annually as entire countries like Finland, Malaysia, or Sweden. While bitcoin is not the only industry that consumes as much energy as entire countries, for example, concrete consumes more energy than India, both industries produce pollution, including carbon emissions.

Furthermore, it’s feasible that bitcoin miners might provide direct advantages to the grid, and, if managed properly, could even result in decreased overall carbon emissions.

Bitcoin and other cryptocurrencies have a problem with energy and the environment. But, if done correctly, all of that energy may be channeled into something beneficial to the earth.

Risky cryptocurrency investments ahead: New York AG

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The New York Attorney General, Letitia James, has issued a warning to investors about “risky cryptocurrency investments,” emphasising the volatile nature of the assets.

While New York continues to push for a ban on proof-of-work (PoW) crypto mining, the attorney general cautioned investors about the risks of investing in cryptocurrency.

Investors are “losing billions” in crypto, according to New York Attorney General Letitia James, who issued an investor advisory on Thursday. Even well-known digital assets sold on reputable exchanges might crash, according to James. As a result, the attorney general believes that crypto investments give investors “more anguish than gain.”

Apart from that, James advised New Yorkers to exercise extreme prudence while investing in cryptocurrency. Because of their volatility, the attorney general believes that these investments may end up being a source of anxiety rather than a source of wealth.

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Announcement reminds investors of all the unregulated cryptocurrency

The published advisory also mentioned various problems that could deter investors, such as the market’s unpredictability, difficulties cashing out, high transaction charges, and the instability of some stablecoins. Investors were also reminded that many digital currencies are unregulated, according to the notice.

The warning came as the New York State Senate passed a bill prohibiting the practise of proof-of-work mining in the state. New mining operations will be outlawed if Governor Kathy Hochul signs the measure, and those who already have permits will not be allowed to renew them.

Meanwhile, KenGen, a Kenyan energy firm, has appealed to Bitcoin (BTC) miners to buy its extra renewable energy. According to a company representative, there is plenty of room in the country for miners, and they are happy to welcome them.

BTC mining revenue is also on the decline as the bear market persists. As the crypto winter deepens, Bitcoin (BTC) mining revenue and profitability have continued to fall in lockstep with the asset’s price. At the time of press, Bitcoin (BTC) was priced at $29,462.79 with a daily drop of 2.51% according to coin market cap.

New York Senate Passes a Bill to Ban Bitcoin Mining Citing Environmental Concerns

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The New York State Senate approved a bill targeting proof-of-work (PoW) bitcoin mining early Friday morning. The move is an approach to correct some of the environmental concerns surrounding cryptocurrencies.

The law, which was passed by the state Assembly last month, would put a two-year embargo on any upcoming carbon-based fuel-powered PoW mining firms in the Empire State.

Existing mining businesses or those in the process of renewing their permits, on the other hand, would be allowed to keep functioning. The bill received a 36-27 vote in the Senate.

According to the bill’s Democratic sponsor, Sen. Kevin Parker, there would be currently only one facility in operation that would be unaffected by the legislation. He also suggested that one pending application could be placed on the table.

New York state will study the environmental impacts of mining

The state will perform a study on the potential environmental implications of proof-of-work mining during the ban.

Many expected the bill to never come out of the committee when the Senate Environmental Conservation Committee failed to discuss it during its final meeting of the session, as it did last year’s version.

Sen. Todd Kaminsky, the committee’s chairman, expressed concern in May that the bill may have “deleterious economic repercussions for New York” if it is perceived as anti-crypto.

Because of the considerable low cost of hydroelectric energy, New York has long been eyed as a desirable location for crypto mining firms to set up plants. In the past years, mining companies have reused decommissioned coal power plants. One such facility, for example, was rebuilt by Greenidge Generation to run on natural gas.

Mining companies in New York have threatened to leave if the moratorium is implemented, noting the relative ease of doing business in more mining-friendly states like Texas.

New York’s Townsquare Media Adds Bitcoin to Its Investment Portfolio

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With the addition of $5 million in Bitcoin (BTC) to its balance sheet, Townsquare Media, a New York-based digital marketing and radio station firm, has become the latest enterprise to support the first cryptocurrency.

Townsquare’s acquisition of BTC was originally revealed in a filing with the US Securities and Exchange Commission (SEC), which was discovered by Macroscope, a Twitter account that focuses on institutional trading.

The corporation “spent an aggregate of $5 million into Bitcoin” during the first quarter of 2021, according to the filing, and offered an explanation for why it picked crypto:

“The Company believes in the long-term potential of digital assets as an investment. The Company may increase or decrease its holdings of digital assets at any time based on our view of market conditions.”

The firm bitcoin adoption increase

While the price of BTC at the time of acquisition was not disclosed, Townsquare reported a $400,000 impairment loss due to “changes in the fair value” of its digital asset holdings throughout the quarter.

The alleged loss appears to be the result of the peculiar reporting requirements for crypto ownership. Townsquare further alleged that it could have sold its BTC for a total of $6.2 million on March 31, when the price of BTC was about $45,500. Because it is so easy to convert BTC to cash through a crypto exchange, the corporation considers its BTC investment to be liquid.

While the acquisition pales in contrast to MicroStrategy’s roughly $3 billion Bitcoin stockpile, Townsquare Media is towards the middle of the list in terms of publicly-traded corporations’ Bitcoin holdings.

According to Bitcoin Treasures, a website that tracks BTC holdings by corporations, Townsquare would be halfway between Cleanspark Inc., which has roughly $4.3 million in BTC, and Cathedra Bitcoin Inc., which has just over $5 million.

Other corporations with large investments in the world’s first cryptocurrency have acknowledged losses owing to having the asset on their balance sheet as the price of Bitcoin has fallen this year and recently touched 10-month lows.

Bill for criminalizing Rug Pulls introduced by New York lawmakers

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A new bill that proposes to criminalize certain offenses related to rug pulls and other crypto frauds were introduced by New York state legislators who have taken a tough stance toward the menace that has wreaked havoc in the digital space.

The Senate bill S8839 which was drafted by Sen. Kevin Thomas called for defining, penalizing, and criminalizing frauds specifically targeted at developers and projects that intend to dupe crypto investors.

The bill aims to provide prosecutors with a clear legal framework against crypto crimes. Besides that, it also calls for a law amendment that will imply rug pull charges on developers that sell “more than 10% of such tokens within five years from the date of the last sale of such tokens.”

Activities that are deemed as Private Key Fraud involve disclosing or misusing another person’s private keys without prior consent. The bill also seeks to charge developers with fraudulent failure to disclose an interest in digital tokens that don’t publicly disclose personal crypto holdings on the landing page of the primary website.

As of now, the bill is under committee review to determine its eligibility for floor consideration.

Another development that shows the growing concerns among the political class is when two members of the House of Representatives — California Representative Norma Torres and Arkansas Representative Rick Crawford recently introduced legislation to mitigate financial risks tied to El Salvador adopting Bitcoin as legal tender.

Proponents of the Bill hope that it will act as a deterrence for crypto fraudsters

A few days ago, The Federal Bureau of Investigation arrested a 37-year-old New York man on 20 April for allegedly defrauding more than a dozen victims out of a total of $1.8 million in a long-running crypto-mining scam.

Between March 2019 and September 2021, officials said Chester “Chet” Stojanovich posed as a dealer of crypto mining equipment, convincing his would-be customers to fork over large payments for mining machines and miner-hosting services, which the accused promised to arrange at a facility in Goose Bay in Canada’s Newfoundland and Labrador province.

According to a complaint, Stojanovich did not purchase as promised and kept the majority of the money for himself. Soon his luck ran out and was arrested in Champlain, N.Y. Stojanovich was charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.

Neon, an NFT marketplace, rolled out the world’s first NFT vending machine in New York

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The world’s first NFT vending machine has opened in New York City’s Financial District, thanks to Neon, the NFT and digital collection platform. The machine, which is located just off Wall Street, takes USD credit and debit cards and then distributes a box with a unique code for the selected NFT, which is readily redeemed on the Neon platform.

Neon has created a simple, accessible way to purchase, sell, and trade NFTs in the real world that requires no cryptocurrency, crypto wallet, or technical knowledge. The vending machine is accessible 24 hours a day, seven days a week. People can spot the NFT vending machine by Neon at 29 John Street in New York, NY.

Jordan Birnholtz, CMO and co-founder of Neon, spoke on Businesswire. “Our goal is to support artists and creators by letting them sell digital art to everyone and to help anyone who wants to become a collector.”

He also added that “NFT buying and selling doesn’t need to be a mystery, and you shouldn’t be required to hold Ethereum, write a smart contract, pay gas costs or bridge blockchains to participate.”

Neon making NFTs accessible to everyone

Birnholtz continued in his conversation that while just 2% of Americans have digital wallets, 80% of the sample space has a credit or debit card. This hints that there is a more significant NFT industry out there that extends beyond cryptocurrency enthusiasts. As Birnholtz implied, this translates to a 40-fold increase in market reach for NFT artists, who will be able to reach a more extensive audience.

He wants to give creators and digital artists a voice because he seldom thinks that their work is frequently overlooked. After all, it isn’t tangible in the conventional sense. He aims to make it even easier to sell digital art than to sell physical art. He appealed to NFT artists, saying, “If creators want to develop NFTs based on their existing content or new stuff, we want them on Neon.”

Neon, which is based on the Solana blockchain, prides itself on being a green marketplace. This new idea by them is an excellent initiative for ordinary people to access NFTs and understand them.

NFTs are now a passport to New York’s brand new Social Club

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NFT, one of the buzziest corners of the crypto market would now act as a ticket to gain entry in New York’s newest social club called Maxwell Tribeca. This was revealed by one of the curators of the program David Litwak who is the founder and former chief executive officer of the tech travel platform Mozio.

As per sources, the new club which will be located at 135 Watts Street is slated to welcome customers on coming July, providing all the elements that define a certain kind of social club such as a prestigious address, swanky decor, exclusive perks for members, etc.

But Litwak has different plans in the run-up to the grand event. He says in order to become an exclusive member, one needs to own a nonfungible token, or NFT- an asset that has been trumpeted from the likes of Tom Brady to Melania Trump.

NFTs which are are digital tokens act like certificates of authenticity but interestingly in the case of Maxwell Tribeca, Litwak claims they would operate as a kind of passport to rarefied spaces and experiences-access that in this case includes your own liquor lockers.

In an interview with Bloomberg, the exec said the 8,000 square-foot space will function as a house party. ‘Instead of ordering a Negroni at the bar, you go get your own gin from your locker and pour yourself a gin and tonic,”

Maxwell Tribeca memberships start at $1,000 for shared liquor lockers; small liquor lockers will go for $5,000, and large liquor lockers $8,000; the monthly membership fee will be $250. 

Litwak intends to work around these issues by building an entirely new marketplace, called Maxwell Social, rather than relying on companies like OpenSea that act as a kind of eBay for NFTs. But that isn’t enough.

A competitor on the horizon?

A rival vying for the attention of NFT crazed New Yorkers

A high-end seafood private dinner club- Flyfish which plans to open its doors in early 2023, has so far raised $14 million through its original NFT launch during which members purchased tokens directly from their website.

Litwak however maintains that Maxwell Tribeca will be a very ‘different experience from Flyfish’

“We’re trying to create thousands of second homes, not third spaces, where people belong, and NFTs are a means to an end”. he added.