The Regulation and the Guidelines are designed for all New York-based Managing Directors and institutions involved in virtual currency business.
“The New York State Department of Financial Services (DFS) is issuing this guidance and request for assurance to ensure your institutions have preparedness plans in place to address operational and financial risk posed by the outbreak of a novel coronavirus known as “COVID-19.” writes DFS
Coronavirus leaves adverse effects on the global economy every day, and New York also wants to ensure that companies are able to extinguish and deal with the consequences in a timely manner.
“To that end, DFS requires that each regulated institution submit a response to DFS describing the institution’s plan of preparedness to manage the risk of disruption to its services and operations. Responses are to be provided to DFS as soon as possible and in no event later than thirty (30) days from the date of this letter. Please submit your responses to the following designated email address: [email protected]”writes the Department of Financial Services
The plan and its content should contain at least:
- “Preventative measures tailored to the institution’s specific profile and operations to mitigate the risk of operational disruption, which should include identifying the impact on customers, and counterparts.
- A documented strategy addressing the impact of the outbreak in stages, so that the entity’s efforts can be appropriately scaled, consistent with the effects of a particular stage of the outbreak.
- Assessment of all facilities, systems, policies and procedures necessary to continue critical operations and services if members of the staff are unavailable for longer periods or are working off-site, including the effectiveness and security of remote access.
- An assessment of potential increased risk of cyber-attacks and fraud due to an outbreak.
- Employee protection strategies, critical to sustaining an adequate workforce during the outbreak, including employee awareness and steps that employees can take to reduce the likelihood of contracting COVID-19.
- Assessment of the preparedness of critical third-party service providers and suppliers.
- Development of a communication plan to effectively communicate with customers, counterparties and the public, and to deliver important news and instructions to employees, along with establishing forums for questions to be asked and addressed.
- Testing the plan to ensure its policies, processes and procedures are effective.
- Governance and oversight of the plan, including identifying the critical members of a response team, to ensure ongoing review and updates to the plan, including the tracking of relevant information from government sources and the institution’s own monitoring program.” writes DFS
The Department of Financial Services requires that each program also have risk management programs and include a plan to assess and monitor the financial risk of the effects of COVID-19.
It should at least include:
- “Assessment of the valuation of assets and investments that may be, or have been, impacted by COVID-19.
- Assessment of the overall impact of COVID-19 on the earnings, profits, capital, and liquidity of your institutions.
- Assessment of reasonable and prudent steps to assist those adversely impacted by COVID-19. See DFS Guidance to New York State Regulated Banks, Credit Unions and Licensed Lenders Regarding Support for Businesses Impacted by the Novel Coronavirus.” writes DFS
The DFS also recalls the obligation to inform the competent authority even if the positive net worth falls below a certain threshold and above the minimum required capitalization.