Blockchain regulation continues to be the subject du jour, with rising scrutiny from authorities businesses across the board. The most recent comes from the New York State Division of Monetary Providers (DFS), which has been a pacesetter within the house because the 2015 “BitLicense” framework underneath the New York Monetary Providers Legislation. On April 28, 2022, new DFS Superintendent Adrienne A. Harris issued recent steering encouraging cryptocurrency corporations to adopt blockchain analytics tools as a greatest apply.
The aim of the really helpful analytics instruments is to curb suspicious transaction actions, together with cash laundering and OFAC sanctions violations. DFS’s recommended new compliance controls seem like a response to each the excessive background stage of felony transactions on cryptocurrency platforms and the newer enhance in Russian makes an attempt to evade sanctions in reference to the invasion of Ukraine. As FinCEN noted, the extra the U.S. and allies strengthen sanctions on the Russian Federation, the larger the motivation for oligarchs and different sanctioned people to spirit their property to secure havens by way of tough to hint cryptocurrency transactions.
The important thing takeaway is that right this moment’s DFS compliance focus is more likely to be tomorrow’s enforcement precedence on the New York State Workplace of the Lawyer Basic (OAG). DFS has the ability to make felony referrals to OAG, and OAG may also deliver actions and not using a referral underneath New York’s blue sky legal guidelines, generally known as the Martin Act. OAG could search to prosecute dangerous actors liable for internet hosting notably egregious cash laundering and sanctions violations to advertise deterrence throughout the cryptocurrency trade.