New York State Department of Financial Services (NYDFS) unveils VOLT program, implementing stricter listing standards for exchanges

The New York State Department of Financial Services (NYDFS) has launched the VOLT program, proposing a set of guidelines for listing, delisting, and greenlisting mechanisms for cryptocurrencies. Public feedback is open until October 20th, with the aim of enhancing the token policies of cryptocurrencies to be more robust and transparent.

NYDFS Releases VOLT Initiative

The New York State Department of Financial Services (NYDFS) Superintendent Adrienne A. Harris announced a project known as the VOLT Initiative, aimed at enhancing the vision, operations, leadership, and technology of DFS to further solidify its role as a leading regulatory authority for virtual currencies domestically.

To drive the VOLT Initiative, NYDFS has released proposed guidance and is seeking public feedback until October 20, 2023. The guidance includes:

• Enhancing risk assessment standards for listing policies and imposing higher requirements for enterprises targeting retail consumers
• Requiring licensees to develop delisting policies that comply with this proposed guidance and submit them for DFS approval
• Updating the DFS Greenlist, approving all tokens and token lists listed or custodied by licensees, and the Greenlist process

Benefits of the Greenlist

Greenlist is entirely independent of any single venture entity's token listing policies and resulting self-certifications. In general, DFS will consider adding a token to the Greenlist if it meets the following criteria:

• The token or token issuer has a proven track record that meets security, soundness, and customer protection, including broad market adoption, or
• The token is a stablecoin issued in New York by a venture entity approved by DFS.

New York is known for having one of the strictest cryptocurrency regulations in the United States. In June 2015, the Department of Financial Services issued the Virtual Currency Regulation 23 NYCRR Part 200 under the New York Financial Services Law, regulating companies engaging in virtual currency business activities in New York, requiring them to apply for a BitLicense or operate as a limited purpose trust company or a bank under New York banking law and obtain approval to engage in virtual currency activities, collectively referred to as "venture entities."

The benefit of the Greenlist is that venture entities can list cryptocurrencies on the Greenlist without prior approval unless notified otherwise by NYDFS. However, venture entities choosing to list Greenlist tokens must:

• Notify DFS in advance of listing
• Have a DFS-approved token delisting policy

However, DFS retains absolute authority over the Greenlist, including the ability to decide to add, remove tokens, avoid adding any token to the Greenlist, fully halt the Greenlist process, prohibit or otherwise restrict the use of tokens before or after venture entities commence using the tokens, or require any venture entity to delist, cease, or otherwise restrict or reduce activities related to any token.

Harris' Two-Year Anniversary with Employee Doubling

This proposed framework comes as Harris marks her two-year anniversary as the head of New York's top financial regulatory agency. Under her leadership, NYDFS fined cryptocurrency companies a total of $132 million, including exchanges like Coinbase and online broker Robinhood's cryptocurrency division, leveraging existing regulatory and enforcement powers to demand corrective actions from companies.

The agency's cryptocurrency division currently has around 60 employees, nearly double the number two years ago.

Harris stated:

My top priority is to ensure that the department's regulatory and operational capabilities keep pace with industry developments to protect consumers and markets. We work with policymakers worldwide, including the U.S. Congress, to ensure there is a federal prudential regulatory agency overseeing the industry.