New York's Financial Regulator Takes Aim at Firms Co-Mingling Crypto Funds (reuters.com) 17
New York's chief financial regulator is set to release new guidance on Monday dictating that companies separate customers' crypto assets from their own, after alleged co-mingling of funds at collapsed crypto exchange FTX and its affiliated trading firm Alameda Research led to hefty losses for clients. From a report: The New York State Department of Financial Services (NYDFS), which leads one of the few state agencies with a regulatory system in place for cryptocurrency companies, will also stipulate that state-regulated companies disclose to customers how they account for clients' digital currency. The guidance is the latest in a series of crypto-related directives NYDFS has issued in the past year, which saw a market collapse that wiped about $1.3 trillion off the value of crypto tokens in 2022. The meltdown triggered the bankruptcies of crypto firms such as FTX, Celsius Network and most recently, Genesis Global Capital, whose lending unit filed for U.S. bankruptcy protection on Thursday. It comes as federal regulators such as the U.S. Commodity Futures Trading Commission (CFTC) are warning about the lack of consumer protections in the crypto sector. Federal agencies like the CFTC say much of what they can do is limited without congressional legislation that would give them additional authority.
not your keys (Score:2)
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That's supposed to be a joke, right?
I hear tulip bulbs are going to be huge (Score:2)
Remember kids... (Score:1)
DeFi is not decentralized Finance - it's Deregulated Finance.
Regulations tend to come into place when corporations are overly greedy and/or stupid in a way that causes the masses to get pissed enough to tell their elected officials to "DO SOMETHING ABOUT THIS OR WE'RE VOTING SOMEONE IN WHO WILL!"
So, if you want to be both greedy and avoid regulation - you need to pull the reigns in enough to keep your suckers... er customers from getting overly pissed. Something that way too many greedy a-holes have done o
A law - yeah, that will do it. (Score:2)
Didn't FTX claim to keep customer assets separate?
Crypto is a mania, and buying it with the idea that you'll make a profit is a fool's investment, but that has little to do with the fraud that FTX perpetrated.
Fraud is already illegal, don't see how another law is going to help.
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Because the world is full of jackasses who's mindset is that if they aren't explicitly told not to, then they can.
"But We're innovative and disrruptive!!!!!"
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And it's a trapezoid not a pyramid!
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This has been the law for banks for ages. Why crypto bros think they can bypass all of this with their pretend banks is baffling. Probably because outside money is needed to give value to these invented currencies and too much of that outside money has come from sources also outside of the law.
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I don't know why they should be compared to banks?. It seems to me like they're running an exchange and I don't think the Nasdaq and their like is allowed to do their own trading at all (they certainly don't and won't but apparently crypto is different).
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An exchange is a bank. If they're holding your "money" it's a bank, even if it's for investment. Just like a company that holds onto your stocks and bonds for you also has to follow investment banking regulations. Wall Street traders are not a bank because they're not holding your money for more than a fraction of a second; if you're short selling or borrowing then the trades actually go through banks.
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Thanks! (In my corner of the world an exchange is not a bank and it would surprise me if this doesn't apply to the whole of EU).
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Because these exchanges aren't actually exchanges; customers deposit money with them.
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Thanks again, I get it. If you take deposits from the public in the US you're a bank. (Here you'd be a financial institute, credit institute if opted in to the EU deposit protection. A bank is full service and can borrow from the central bank etc).
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No, seriously, this is one of the best trolls I've seen on Slashdot in ages.
If I read it quickly I can even almost do it with a straight face. But then I think about it and laugh, because it is very funny.
Well done.