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Problems in the regulatory sphere regarding crypto assets Dogecoin and Ripple, which were recently removed from the so-called “green list” due to their failure to meet the criteria established in the cryptocurrency sector, according to the New York Financial Supervisory Authority.
Let’s see all the details below.
Crypto: Dogecoin, Ripple and the problems with New York regulation
As anticipated, recently, the New York Department of Financial Services unveiled a substantial update to its cryptocurrency oversight regime, which included new criteria for the listing of different crypto by digital companies authorized by the agency.
As part of this revamp, the DFS revoked approval for more than two dozen tokens previously included on its “green list,” including Ripple, Dogecoin, and Litecoin.
Currently, eight tokens remain on the list, including Bitcoin, Ether and the new digital currency PayPal.
At a time when Congress proves hesitant to regulate cryptocurrencies, the DFS has established a national leadership position in the field of digital asset oversight, mainly through its BitLicense program and virtual currency unit.
Although the cryptocurrency industry has often criticized the department for its meticulous licensing process, this new directive highlights the balanced approach taken by the DFS in regulating cryptocurrencies, while other state and federal agencies opt for punitive actions.
It should be noted that the DFS had previously created the “greenlist” of tokens as part of its broader crypto oversight framework.
Under previous guidelines, firms authorized by the DFS through its virtual currency program could obtain approval to hold and list tokens using a self-certification process that, while streamlining the process, still provided the department with a supervisory role as firms were required to communicate periodically with the DFS.
Once two firms had self-certified a token for its custody or price, the cryptocurrency would be added to the DFS’s green list.
This meant that the token had been approved for custody or listing by any DFS-licensed company, thus helping to further speed up the process and facilitating the use of authorized tokens.
Reducing the ‘Green List’ of crypto assets: details
According to an August release that was shared with Fortune, the original “Green List” contained 25 tokens previously approved for custody, price, or both, with prominent names including Bitcoin, Dogecoin, Ethereum, Litecoin, Ripple, and the new digital currency PayPal.
As part of their recent directive, the New York Department of Financial Services (DFS) declared its intention to review and update the green list, which now includes only eight tokens.
Worth noting is the absence of USDC, the second-largest stablecoin by market capitalization, issued by the company Circle, which holds the BitLicense. This cryptocurrency does not appear in either the previous or updated version of the green list.
Specifically, a DFS spokesperson commented on the latest developments stating:
“The list of coins on the green list has been adjusted to reflect the new general framework regarding coins allowed on the green list.”
In a joint press release issued Monday, the DFS emphasized that their new directive would “clarify” expectations regarding coin listing and delisting policies for entities subject to their regulation.
New York DFS: at the forefront of crypto regulation
Along with the green list update, the DFS announced plans to raise risk assessment standards regarding coin listing policies and improve requirements for retail trading activities for clients, moving away from the previous self-certification system.
In addition, license holders will be required to implement coin deletion policies, thus granting companies the ability to discontinue support for certain cryptocurrencies in order to mitigate impacts on users.
Under the leadership of Superintendent Adrienne Harris, the Department of Financial Services (DFS) has taken a strict oversight role in the cryptocurrency market during the recent bearish phase.
In fact, the DFS issued its first sanctions against crypto companies, including a $100 million settlement with Coinbase in January 2023, due to non-compliance with its compliance program.
In February, the DFS issued an order to Paxos, a crypto company, to cease issuing BUSD, a major stablecoin issued in partnership with Binance.
Despite some initial resistance, DFS has gradually gained the respect of many players in the cryptocurrency industry in the United States.
Some regulators, such as the Securities and Exchange Commission, have been reluctant to fully engage in the regulatory process of this highly volatile industry.
The green list update reflects the persistent dilemma faced by cryptocurrency companies, especially exchanges, in determining which tokens to include, given the environment of regulatory uncertainty.