New York state announces another upgrade to its virtual currency monitoring capacity

The New York State Department of Financial Services (NYDFS) has announced improvements to its ability to detect illegal virtual currency activity among the entities it regulates. The new capacities are part of his efforts to keep up with the industry and actively respond to the virtual currency market, he said.

NYDFS released a brief statement about its new features dated February 21, which did not provide any details on “new tools for monitoring insider trading and market manipulation risks”. However, the statement promised:

“The new enhancements will provide the Department with additional capabilities to detect potential insider trading, market manipulation, and proactive activities related to the disclosure or potential disclosure of persons and applicants regulated by the Department of listed virtual currency wallet addresses.”

NYDFS Superintendent Adrienne Harris said: “These tools will help us fight financial crime and fraud, hold regulated entities accountable, and further strengthen our national leadership in virtual currency oversight.”

Announcements of unspecified new technology capabilities appear to be part of the NYDFS enforcement scenario. Last year, the agency announced “fast track procurement of additional blockchain analytics technology” as part of its enforcement of sanctions against Russian companies following that country’s invasion of Ukraine.

The agency also regularly issues guidance to the entities it regulates, advising banks on dealing with cryptocurrencies in December and claiming to be the first regulator to publish guidance on issuing stablecoins in June.

Recently, NYDFS was instrumental in the decision of Blockchain infrastructure platform Paxos Trust to stop issuing the Binance USD (BUSD) stablecoin after it launched an investigation into the coin. Earlier this year, he received a $100 million settlement from Coinbase for allegedly storing 100,000 pending suspicious transaction alerts. In August, the company reached an agreement with Robinhood Crypto for a $30 million fine for violating anti-money laundering requirements.

Binance Withdrawals and BUSD Redemptions Soar After Paxos Crush

In addition, the NYDFS is reportedly investigating the Gemini Earn loan program.

New York State introduced its BitLicense virtual currency, well known for its strict requirements, in 2015. This licensing regime was controversial, with even New York Mayor Eric Adams criticizing it as “suffocating”.

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