New York Enhances Safeguards for Crypto Investors by Enhancing Complaint Management
The New York State Department of Financial Services (NYDFS) has released new guidelines that require companies involved in virtual currency activities to have strong policies and procedures to promptly address customer service requests and complaints.
Superintendent Adrienne Harris issued the directive, emphasizing the importance of virtual currency entities (VCEs) providing consumers with a transparent and timely resolution process. VCEs include businesses that hold New York’s BitLicense as well as limited purpose trust companies under New York Banking Law, effectively covering licensed cryptocurrency companies in the state.
The guidelines, part of the VOLT initiative, aim to ensure a positive customer experience for both consumers and businesses. Superintendent Harris stated, “Consumers have the right to a transparent and timely process for resolving complaints and answering questions, regardless of the company or product in question.”
According to the guidance, VCEs must offer accessible channels such as phone, email, or chat for customers to submit complaints and service requests. These firms must also provide regular updates on the status of inquiries, including estimated timelines for resolution.
Additionally, NYDFS requires VCEs to conduct a quarterly analysis of received requests and complaints, which will be subject to regulatory scrutiny. By November 1, 2024, firms must submit their related policies and procedures for NYDFS review.
NYDFS has taken proactive steps to regulate the cryptocurrency sector in New York, introducing the BitLicense regime in 2015. This regulation has led to various companies, including Coinbase Inc., Circle Internet Financial, LLC, and Robinhood Crypto, obtaining virtual currency licenses. However, it has also caused some companies to exit the New York market due to the strict regulations.
The statement from NYDFS clarifies that the provided information in the guidelines is not exhaustive and may be updated in response to new information or market changes. The guidance is not intended to limit the applicability of any existing laws or regulations.
In related news, New York Attorney General Letitia James has pledged to increase regulatory enforcement against non-compliant cryptocurrency companies. This commitment was exemplified by a recent $2 billion settlement with crypto lender Genesis over allegations of misleading investors about its Gemini Earn program. The settlement requires Genesis to return the fraudulently obtained funds and cease operations in New York.
Attorney General James has been diligent in overseeing the crypto market since her election in 2018, initiating several crackdowns to ensure compliance with financial regulations. The NYDFS has also imposed over $177 million in penalties on cryptocurrency companies that have failed to comply with the law. James reiterated her position on regulatory compliance, stating that crypto companies must adhere to the same rules as everyone else, and those who don’t will be pursued.
The evolving regulatory landscape in New York highlights the state’s commitment to establishing a secure and compliant environment for cryptocurrency transactions. This reflects the increasing scrutiny and regulatory demands faced by the crypto industry as a whole.
