NY Regulator Demands Vigilance Against Market Manipulation from Bitlicense Firms
Accusations, fears and rumors of exploitation from the cryptocurrency market have been around for a long while now. Now one regulator demands that companies in its authority will take action against such possible risks.
The New York State Department of Financial Services (DFS) has issued a guidance paper on Wednesday, reminding all cryptocurrency employers licensed by it they are required to implement measures designed to effectively detect, prevent, and react to fraud, attempted fraud, and similar wrongdoing. In addition, it reminded Bitlicense holders that they must be especially vigilant against attempts at market manipulation. The regulator has granted six Bitlicenses so far, including to Bitflyer USA, Coinbase Inc., XRP II and Circle Internet Financial, and charters to Gemini Trust Company and itBit Trust Company.
“DFS took the lead in 2015 in controlling the digital currency market, and we are still cautious concerning risks in these markets. Market manipulation presents serious dangers, both to customers and to the safety and soundness of financial services associations,” explained Superintendent Maria T. Vullo. “Since the cryptocurrency markets continue to evolve, DFS is directing virtual currency companies to take the necessary steps to guard against fraud, and to be extra cautious about manipulation. By these actions, the marketplace can evolve with powerful regulatory oversight.”
All Bitlicense Firms to Report Risks
In its guidance newspaper, the DFS also led cryptocurrency companies to adopt measures which have successful execution of a written policy to recognize and evaluate the entire assortment of fraud-related hazard regions, such as market manipulation. The coverage should provides controls and procedures to safeguard against identified risks, allocate responsibility for tracking these, and provide to the analysis of fraud and other wrongdoing, whether suspected or real.
Immediately upon finding any wrongdoing, a certified cryptocurrency company must submit an account to DFS including all the specifics. They need to also submit, as soon as practicable, further reports of some advancements together with a statement of the actions required, along with an overview of changes set up so as to prevent repetition of similar events.