On October 1, the NYDFS and Wyoming Division of Banking announced a memorandum of understanding (MOU) establishing a framework for coordinated oversight of virtual currency and digital asset activities. The agreement is intended to streamline licensing and chartering processes, improve supervisory coordination, and facilitate information sharing between the two state regulators.
The MOU applies to entities engaged in, or seeking to engage in, digital asset activities in either state. It establishes procedures for coordinating licensing decisions, examinations, and potential enforcement actions while preserving each regulator's independent authority. Specifically, the agreement:
- Streamlines licensing and chartering reviews. The regulators will share application analyses, examination histories, and other supervisory information to facilitate licensing and chartering decisions for entities operating or seeking authorization in both states.
- Establishes expedited application reviews. Entities licensed or chartered in one state for at least three years and not subject to an enforcement action may qualify for expedited review when applying in the other state. For qualifying applications involving sufficiently similar operations, the reviewing regulator will endeavor to issue a determination within six months of the application or receipt of historical examination information, whichever is later.
- Coordinates examinations and supervision. The regulators will seek to align examination schedules, conduct joint examinations where practicable, and share examination reports and other supervisory findings for entities operating in both jurisdictions.
- Facilitates enforcement cooperation. The agreement establishes procedures for notifying the other regulator of potential enforcement actions, sharing investigative information, and pursuing coordinated or joint enforcement actions where appropriate.
- Protects confidential supervisory information. The MOU establishes safeguards governing the exchange, use, and disclosure of nonpublic information, including restrictions on third-party disclosure and procedures for responding to requests for confidential records.
The agreement does not modify either regulator's existing legal authority, establish reciprocal licensing, or prevent either state from independently pursuing supervisory or enforcement actions.
Putting It Into Practice: The agreement comes as states continue to develop their regulatory frameworks for digital asset businesses (previously discussed here and here). Digital asset businesses operating in multiple states should keep in mind that this is multi-state compliance oversight may become the norm. Companies should also anticipate greater information sharing between regulators and coordinate exams and enforcement actions.