New York State Department of Financial Services (DFS) Superintendent Adrienne A. Harris today updated guidance on custodial structures and the importance of beneficial interest always remaining with customers in the event of insolvency. As the demand for virtual currency custody services continues to grow across both retail and institutional customer segments, today’s guidance provides greater specificity on the Department’s expectations regarding sub-custodians and reiterating sound custody and disclosure practices.
“The Department’s nation-leading digital asset and consumer protection regulatory standards have set clear and transparent expectations to protect New Yorkers since 2015,” said Superintendent Adrienne A. Harris. “Guidance is a particularly important regulatory tool, allowing the Department to respond to new and evolving circumstances. As we see the use of more sub-custodial relationships in the digital asset space, this guidance provides additional clarity on how those relationships should be governed.”
The updated guidance:
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makes clear the Department’s expectations regarding acceptable sub-custodians and provides detailed expectations for sub-custodial service agreements;
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provides sub-custodians with guardrails to structure their asset custody framework in a way that protects the interests of customers;
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clarifies the Department’s expectations regarding permissible uses of customer assets; and
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continues to emphasize sound custody and disclosure practices to protect customers in the event of an insolvency or similar proceeding.
DFS has and continues to use all of its regulatory tools to keep pace with the industry, make data-driven policy decisions, and quickly respond to the virtual currency market changes.
This 2025 guidance supersedes guidance that was previously issued in January 2023. A copy of the 2025 guidance can be found on the Department’s website.
