NYDFS advises crypto firms not to commingle user and corporate funds in the event of insolvency

NYDFS advises crypto firms not to commingle user and corporate funds in the event of insolvency


The New York Department of Financial Services, or NYDFS, has released guidelines on how licensed crypto firms should handle customer assets should they face “insolvency or similar proceeding”.

In a Jan. 23 announcement, NYDFS superintendent Adrienne Harris said crypto firms and exchanges operating under a BitLicense — required in New York state — should segregate corporate funds from users’ virtual currency holdings both on-chain and in the “internal ledger accounts” of the company’s custodian. According to the regulator, crypto firms are expected to hold users’ assets “only for the limited purpose of carrying out custody and safekeeping services”:

“A [virtual currency entity’s] customer agreement should make clear the parties’ intentions to enter into a custodial relationship, rather than a debtor-creditor relationship.”

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In addition to these guidelines, NYDFS added

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