The Proposed Guidance would require enhanced criteria for coin-listing and delisting procedures for New York-licensed virtual currency entities.

By Jenny Cieplak, Arthur S. Long, Yvette D. Valdez, Stephen P. Wink, Ian Irlander, and Deric Behar

On September 18, 2023, the New York Department of Financial Services (DFS) issued Proposed Updates to Guidance Regarding Listing of Virtual Currencies (the Proposed Guidance) pursuant to its ongoing VOLT initiative to strengthen the oversight of virtual currencies.

The Proposed Guidance updates DFS’s general framework for the creation of firm-specific policies by virtual currency entities[1] (VCEs) with respect to the adoption, listing or delisting of a virtual currency. It provides for a self-certification process for listing coins provided such VCE has a DFS-approved coin-listing policy. Notably, VCEs that do not have an approved coin-listing policy may only list coins that are included in the DFS virtual currency “Greenlist” or that are individually approved by DFS for listing by such VCE as part of an application for a material change to business under NYCRR 200.10. However, DFS may at any time and in its sole discretion require VCEs to delist or limit New Yorkers’ access to specific coins.

DFS’s stated goals under the policy include consumer protection as well as safety and soundness of VCEs.

The Greenlist Framework

In connection with the Proposed Guidance, DFS issued a revised General Framework for Greenlisted Coins (the Greenlist Framework). The Proposed Guidance would allow VCEs to list coins included on the Greenlist with prior notice to DFS, but without DFS’s prior approval, regardless of whether the VCE holds an approved coin-listing policy.

To be included on the Greenlist, the coin or coin issuer must demonstrate a historic record consistent with safety and soundness and the protection of customers, as well as broad marketplace adoption. Stablecoins approved by DFS for issuance in New York by a VCE are automatically added to the Greenlist.

The updated list consists of the two most well-known digital assets (Bitcoin and Ether), and six stablecoins issued by New York trust companies. DFS removed 17 digital assets from the Greenlist, including XRP, Dogecoin, and Litecoin.

Prohibited Listings

The Proposed Guidance also includes the following categories of coins that may not be listed without prior DFS approval (regardless of whether the VCE has an approved coin-listing process):

  • stablecoins that are not on the Greenlist, and coins designed to serve as collateral for stablecoins not on the Greenlist (such as the Terra/Luna combination);
  • exchange coins (i.e., coins issued by an exchange or which confer benefits on an exchange);
  • coins associated with a protocol that is not sufficiently decentralized (including native protocol tokens and other tokens issued on that protocol);
  • coins that are designed or “substantially used” to circumvent laws and regulations (note that “substantially used” is not further clarified);
  • privacy coins (i.e., coins that have features that may facilitate the obfuscation or concealment of the identity of a customer or counterparty);
  • bridged coins (i.e., coins that circulate on a protocol in which they are not natively issued); and
  • any coin for which less than 35% of the total supply is in circulation.

DFS has proposed its own criteria for decentralization, providing examples such as coins for which more than 51% of the hash power is controlled by a single entity or individual. Decentralization of governance is not mentioned, so theoretically a coin whose development is controlled by the initial issuer could still be listed as long as transactions in the coin are validated in a decentralized manner.

Coin Listing Policy Requirements

Under the Proposed Guidance, a VCE need not seek prior DFS approval to list a coin that does not appear on DFS’s Greenlist via self-certification, so long as:

  1. DFS has approved the VCE’s coin-listing policy which meets DFS standards for self-certification of the listing of non-Greenlisted coins.
  2. The VCE provides prior written notice to DFS of any coins that it self-certifies under such approved coin-listing policy.
  3. The VCE maintains records in a manner consistent with DFS’s and such VCE’s recordkeeping requirements and such records are made available upon request for inspection by DFS.

The Proposed Guidance sets forth the following categories of information that must be contained in an acceptable coin-listing policy:


  • The VCE must have a board or other governing body that is independent from those responsible for making listing recommendations. This board must have reviewed and approved of the coin-listing policy, reassess and approve the coin-listing policy on at least an annual basis, and must also approve each new coin before being listed.
  • The coin-listing policy must also contain procedures for identifying, addressing, and disclosing conflicts of interest in the coin-listing decision-making process.
  • The VCE must provide DFS with written notice of any material changes to its coin-listing policy, and of any discovered noncompliance of its coin-listing policy with DFS guidance.

Risk Assessment

  • The coin-listing policy must require thorough due diligence on both the relevant coin and its issuer prior to approval for listing, including with respect to the following risk categories: Technical Design and Technology; Operational; IT/Cybersecurity; Market and Liquidity; Illicit Finance; Legal; Reputational; and Regulatory.
  • The VCE must also identify and mitigate any issues related to market manipulation and ensure that customers are protected from unfair, deceptive, or abusive practices.


The coin-listing policy must:

  • require a periodic reevaluation (at least annually) of listed coins consistent with safety and soundness considerations;
  • adopt, document, and implement control measures to manage risks associated with the coin; and
  • be properly integrated into a VCE’s overall risk and compliance framework, including with respect to DFS and other regulatory requirements and guidance (such as anti-money laundering and sanctions compliance obligations).

Coin Delisting Policy Requirements

The Proposed Guidance requires every VCE to maintain a coin delisting policy, regardless of whether it has a listing policy. Such policy must oblige the VCE to provide 30 days’ written notice to its customers prior to delisting any coin, unless otherwise approved or directed by DFS. The Proposed Guidance further sets out the following categories of information that must be contained in an acceptable coin-delisting policy:


  • The VCE must have a board that is independent from those responsible for making delisting recommendations. This board must have reviewed and approved of the coin-delisting policy and continue to reassess and approve at least on an annual basis.
  • The VCE must provide DFS with written notice of any material changes to its coin-delisting policy.


The coin-delisting policy must:

  • identify clear roles and responsibilities within a VCE for initiating and executing delisting, including escalation of approval for delisting through management to the board;
  • include procedures for ongoing monitoring, and periodic review and updating at appropriate risk-based intervals; and
  • set forth clear thresholds and criteria that may prompt a delisting, and the types of events that may cause a delisting to be necessary or appropriate, including new findings regarding a coin or its issuer resulting from periodic reevaluations and ongoing monitoring; changes in the legal or regulatory environment; or a DFS directive to delist.


The coin-delisting policy must set forth procedures for execution of any delisting, including:

  • advance notice to customers;
  • customer support processes;
  • documentation of decision-making and of customer support;
  • ongoing monitoring; and
  • impact analysis on the VCE’s business.


The Guidance is yet another step by DFS to “cement [its] role as the leading regulator of virtual currency in the nation” in the continued absence of a comprehensive federal regulatory framework. Notable initiatives by DFS in the digital asset space include the following:

  • In early 2023, DFS issued Guidance on Custodial Structures for Customer Protection in the Event of Insolvency, clarifying the regulator’s expectations for VCEs on safekeeping customer digital assets (see this Latham blog post for more information).
  • In late 2022, DFS published final guidance to covered banking organizations engaging in (or seeking to engage in) virtual currency-related activity in New York State, in which key review areas are enumerated (see this Latham blog post for more information).

Separately, but related, the New York Attorney General proposed a bill (Crypto Regulation, Protection, Transparency and Oversight Act, i.e., the CRPTO Act) that would empower DFS to further regulate the digital asset space. If passed, the bill would provide the NYAG’s office with greater enforcement powers to police the digital asset industry and also expand DFS’s authority to regulate individuals and businesses engaging in digital asset transactions (see this Latham blog post for more information).

Financial Services Superintendent Adrienne Harris noted in her announcement of the Proposed Guidance that “[g]iven the speed with which the virtual currency industry changes, DFS is using all of its regulatory tools to keep pace with industry, make data-driven policy decisions, and proactively respond to the changes and risk in the virtual currency market.”

The Proposed Guidance is open for public comment until October 20, 2023. However, DFS states that VCEs are “strongly encouraged to begin creating coin-delisting policies in compliance with [the new requirements] during the public comment period.”

Of note, DFS has stated that all VCEs listing virtual currencies must meet with DFS by December 8, 2023, to preview their draft coin-delisting policy. Final coin-delisting policies must be submitted to DFS for approval by January 31, 2024.


[1] Virtual currency entities are those holding virtual currency licenses under 23 NYCRR Part 200 (i.e., BitLicenses) and New York-chartered limited purpose trusts engaged in virtual currency business activity.