On Monday, September 18, the New York Department of Financial Services (NYDFS) proposed substantial changes to its virtual currency oversight regime. These changes have a direct impact on what cryptocurrencies licensed firms in New York can offer to their customers.
Among the notable changes, the NYDFS has delisted Ripple (XRP) and Dogecoin (DOGE) from its exclusive “greenlist” of approved cryptocurrencies. This means that virtual currency (VC) firms in New York are no longer permitted to list or trade XRP, DOGE, LTC, or other coins removed from the list.
Only eight cryptocurrencies, including Bitcoin, Ethereum, Gemini Dollar, GMO JPY, GMO USD, Pax Dollar, and the just-launched Paypal Dollar (PYUSD), are now supported by the regulator’s greenlist.
Understanding the NYDFS Greenlist Criteria
The NYDFS greenlist is a compilation of cryptocurrencies that meet the regulatory standards set by the agency. To secure a spot on this list, a cryptocurrency must satisfy specific criteria. These criteria include demonstrating a sufficient level of decentralization, maintaining a robust security track record, and possessing a clear and legitimate use case, among others.
However, the NYDFS has not only delisted certain cryptocurrencies but has also introduced new rules for crypto listings. The agency now expects greater transparency from crypto firms in how they evaluate and list cryptocurrencies.
While the NYDFS has not disclosed a specific reason for removing XRP and DOGE from the greenlist, it is worth noting that the agency has expressed concerns regarding the regulatory status of both cryptocurrencies in the past.
Notably, the Securities and Exchange Commission (SEC) has an ongoing lawsuit against Ripple, the company behind XRP, alleging that XRP is an unregistered security. Although the announcement has many people worried, Wrath of Kahneman, a user on X (Twitter), explained that this does not mean that Ripple or any of its firms have lost their payment licenses in New York.
To clarify, #Ripple did not lose a license in NY, nor any Ripple entity. NY DFS license holders may only custody digital assets on the approved DFS list. #XRP, the digital asset, was removed from the list today. https://t.co/gqHcpaM2iT
— WrathofKahneman 🪝 (@WKahneman) September 19, 2023
He stated that this new development suggests that license holders for the NYDFS may only custody digital assets on the green list.
The removal of XRP and DOGE from the New York State Department of Financial Services (NYDFS) greenlist could restrict trading options for investors in New York, potentially leading to decreased liquidity and subsequent price declines. Additionally, this action by the NYDFS may influence other exchanges and venture capital firms to delist XRP and DOGE, further exacerbating the liquidity and price challenges for these tokens.
However, none of these coins have reacted negatively to this development and are currently trading in the green as of the time of writing this.
