The Department of Financial Services, New York, has released an upgraded framework for detecting, monitoring, and managing illegal activities engaged by entities registered under its rules and regulations.
The update, which was revealed by its Superintendent, Adrienne A. Harris, showed that the development was important as the transformation of the virtual currency industry is fast.
Speaking on the upgraded framework, Harris said “these tools will help us combat financial crime and fraud, hold regulated entities accountable, and further strengthen our national leadership in virtual currency supervision”.
The document further revealed that the DFS can more efficiently “detect potential insider trading, market manipulation, and front-running activity associated with Department-regulated entities’” while watching out for potential exposure of these entities to virtual currencies that will be launched with time.
DFS and virtual currency regulations
In the wake of various illegal activities and crimes committed by virtual asset organizations including crypto-based, the DFS has shown more concerns towards users as well as organizations involved in the virtual currency economy. This is one reason the organization created the virtual currency regulation in 2015
Following the collapse of FTX and other cascading effects, on January 23rd, 2023, the regulatory body warned organizations to establish a demarcation between their assets and the crypto assets of their customers.
As per the upgrade, the DFS added that the guideline will be useful regarding several use cases related to blockchain analytics and USD-backed stablecoins. “DFS continues to use all of its regulatory tools to keep pace with the industry, make data-driven policy decisions, and respond proactively to the virtual currency market,”
Paxos and DFS
In a “bid to bear control of the current market situation, and protect consumers”, the DFS launched a recent investigation on Paxos, the issuers of Binance USD (BUSD), a USD-pegged stablecoin issued by Paxos. DFS said that the issuance of the BUSD by Paxos didn’t follow proper regulations and thus has been illegally done.
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