The NYDFS requires state-sanctioned crypto companies to provide detailed of coronavirus contingency plans. Companies are required to submit their plans within 30 days, but preferably as soon as possible.
15 March, 2020 | AtoZ Markets – New York Mayor, Bill de Blasio declared a state of emergency in response to the coronavirus epidemic yesterday. He also warned the public that coronavirus could “easily be a six-month crisis.” But companies in the state were still thinking about what they could do to deal with the epidemic. The coronavirus outbreak also forced to close many financial events in this year.
NYDFS Requests Crypto Exchanges to Create COVID-19 Contingency Plans
The New York Department of Financial Services (NYDFS) sent letters on 10 March, instructing all regulated institutions engaged in crypto-related activities to develop contingency plans for coronavirus. According to the letters, “virtual currency” companies must develop contingency plans and it must include:
- Employee protection strategies,
- Increased cyber-risk mitigation,
- Disaster communication plans and procedures
Preparations will ensure the continued functioning of critical operations “to a minimum”. They must also establish their plans point by point for the possibility of an epidemic. The letter also stated:
“COVID-19 has already had negative economic effects nationally and globally. Each regulated entity must establish plans to determine how it will manage the impact of the epidemic. The plans are also to assess disruptions and other risks to its services and activities “.
NYFDS asked crypto companies to respond as soon as possible, and “in no case later than 30 days” from their letter. Yesterday, ESMA also instructed Coronavirus contingency plan for financial market participants.
Security Risk for the Coronavirus Outbreak
The regulator was also particularly concerned about the possibility of hackers attempting to exploit the virus epidemic. NYDFS “underscored” the risk of under-the-radar hacking and urged companies to consider implementing more security measures that could detect “fraudulent trading or withdrawal behaviour”.
The agency also highlighted the risk that remote workers could endanger assets on deposit. When they move funds from “cold” storage (offline) to “hot” wallets (connected to the Internet), it could be risky. If companies find themselves in a difficult situation, they are obliged to inform the NYDFS. They also can inform NYDFS if their positive net worth falls below a certain threshold above the minimum capitalization required.
Think we missed something? Let us know in the comment section below.