In brief
- The NYDFS has issued a letter asking for “preparedness plans” from crypto companies in the state.
- Plans must include disaster communication contingencies, cyber-risk mitigation and employee protection strategies.
- Firms regulated by the NYDFS include Coinbase, Ripple and Bitpay.
The New York Department of Financial Services (NYDFS) has demanded crypto companies submit detailed plans for how to deal with the coronavirus outbreak.
In a letter published on March 10, the regulator laid out an exhaustive list of what it expects firms in the crypto space to include in their “preparedness plans” to address “operational and financial risk posed by the outbreak of a novel coronavirus.”
The NYDFS has requested plans include details on how to deal with operational disruption, employee protection strategies, a communication plan to deal with customers, and plans for how to “manage the effects of the outbreak” and other risks.
An assessment of potential increased risk of cyberattacks and fraud due to an outbreak should also be detailed, according to the regulator. The NYDFS stressed the need to prepare for heightened threats as “bad actors attempt to take advantage of a COVID-19 outbreak.”
The letter goes on to warn about the possibility of custody risk for cryptocurrencies, such as the possible need for special arrangements to move virtual currency from “cold” to “hot” wallets during times when employees may be working remotely.
Firms have just 30 days to submit their plans.
There are currently 18 companies who have been granted BitLicenses allowing them to deal with cryptocurrencies. These companies are regulated in New York State by the NYDFS and include Coinbase, BitPay, Gemini, Ripple, Square and Coinsource.
Crypto markets have been hit hard as traditional markets and US stocks suffer their worst collapse in over 30 years as the world struggles to deal with the COVID-19 outbreak.
The price of Bitcoin has dropped 40% over just the last two days, falling from $9,000 to as low as $4,100.
Many tech firms are requesting their staff self-isolate and work-remotely, and a number of crypto events have been cancelled worldwide.