As federal regulation remains patchy, firms may want to consider a New York state charter as a potential avenue to expand digital asset offerings in a compliant manner.
By Arthur S. Long, Barrie VanBrackle, Stephen P. Wink, and Deric Behar
On March 22, 2024, WisdomTree, Inc., a global asset management firm, announced that the New York Department of Financial Services (NYDFS) granted a New York limited purpose trust company charter to its subsidiary WisdomTree Digital Trust Company
The CRPTO Act is intended to increase transparency and consumer protections, and reduce conflicts of interest, through heightened disclosures and penalties.
By Jenny Cieplak, Arthur S. Long, Yvette Valdez, Stephen P. Wink, and Deric Behar
On May 5, 2023, New York Attorney General (NYAG) Letitia James introduced a bill that, if passed, would increase New York’s oversight of digital assets market activity.[1] The Crypto Regulation, Protection, Transparency and Oversight Act (the CRPTO Act, or the Bill) would provide the NYAG’s office with greater enforcement powers to police the digital asset industry. It would also expand the New York Department of Financial Services’ (NYDFS’s) authority to regulate individuals and businesses engaging in digital asset transactions. The CRPTO Act comes on the heels of several high-profile enforcement actions by the NYAG against digital asset businesses.
The Guidance clarifies the regulator’s expectations on safekeeping customer digital assets, and the disclosures that must accompany such arrangements.
By Arthur S. Long, Parag Patel, Marlon Q. Paz, Yvette D. Valdez, Barrie VanBrackle, Pia Naib, Donald Thompson, and Deric Behar
On January 23, 2023, the New York Department of Financial Services (NYDFS) published Guidance on Custodial Structures for Customer Protection in the Event of Insolvency (the Guidance). It guides virtual currency entities (VCEs)
Digital asset activities of licensed institutions must be approved and will be assessed for potential safety and soundness risks.
By Arthur S. Long, Pia Naib, and Deric Behar
On December 15, 2022, the New York State Department of Financial Services (NYDFS) issued final guidance to covered institutions engaging in (or seeking to engage in) virtual currency-related activity (the Guidance). Such covered institutions are New York “banking organizations” — New York-chartered banks, trust companies, private bankers, savings banks, safe
Federal court allows NYSDFS lawsuit against OCC FinTech charter to proceed, raising further questions about the charter’s viability.
By Alan W. Avery, Todd Beauchamp, Loyal T. Horsley, Pia Naib, and Charles Weinstein
In a May 2 order, US District Court Judge Victor Marrero rejected the Office of the Comptroller of the Currency’s (OCC’s) recent motion to dismiss the New York State Department of Financial Services’ (NYSDFS’) new lawsuit challenging the OCC’s FinTech charter, and by doing so, may have put the charter in limbo for the foreseeable future.
Overview
As detailed in this previous commentary, the NYSDFS’ then-Superintendent Maria T. Vullo sued the OCC and then-Acting Comptroller Keith Norieka in response to the OCC’s 2016 White Paper — “Exploring Special Purpose National Bank Charters for Fintech Companies.” Superintendent Vullo and the NYSDFS alleged that granting the proposed charter was outside the scope of the OCC’s statutory authority and would be harmful to the US financial system. The suit, however, was dismissed, primarily on the grounds that it was premature given the OCC had not yet taken any official action on the chartering process (i.e., the OCC had only released the White Paper). Following the dismissal of the NYSDFS suit, as well as the dismissal of a similar suit brought by the Conference of State Bank Supervisors, the OCC issued a policy statement in July 2018 announcing that it would begin accepting applications for special purpose national bank (SPNB) charters for non-depository FinTech companies. In the wake of this more formal movement on the FinTech charter, Superintendent Vullo again sued the OCC and the new Comptroller, Joseph Otting, in September 2018, seeking to block the OCC from taking further action to implement the chartering process. The OCC moved to dismiss the new NYSDFS suit, arguing that the claims were still premature because the OCC had not yet received — let alone approved — any FinTech charter applications.