United States of America: Issued NYDFS Guidance on Custodial Structures for Customer Protection in the Event of Insolvency for providers of virtual currency

On 23 January 2023, the New York Department of Financial Services (NYDFS) issued a Guidance on Custodial Structures for Customer Protection in the Event of Insolvency for providers of virtual currency. The Guidance outlines the consumer protection requirements that the providers holding a virtual currency licence must follow. In particular, the NYDFS stated that the providers are required to store the books and records, disclose all the information related to their services and products and ensure their marketing materials don't outline false or misleading information. Furthermore, the Guidance provides information regarding the requirement for separate accounting for customer virtual currency, sub-custody arrangements and customer disclosure regarding risk assessments.