The New York State Department of Financial Services has updated its guidance on virtual currency custody, setting out more specific expectations for custodial structures and reinforcing that customers should retain beneficial interest in their assets in the event of an insolvency. The update responds to growing demand for virtual currency custodial services and increased use of sub-custodial relationships. The guidance clarifies what DFS considers acceptable sub-custodians and outlines detailed expectations for sub-custodial service agreements. It also provides guardrails for how sub-custodians should structure custody frameworks to protect customers’ interests, clarifies permissible uses of customer assets, and reiterates expectations for sound custody and disclosure practices to protect customers in an insolvency or similar proceeding. The 2025 guidance supersedes DFS guidance issued in January 2023.
New York State Department of Financial Services 2025-09-30
New York State Department of Financial Services updates virtual currency custody guidance to clarify sub-custodian expectations and customer protections in insolvency
The New York State Department of Financial Services has updated its guidance on virtual currency custody, emphasizing customer retention of beneficial interest in assets during insolvency. The guidance details expectations for custodial structures, acceptable sub-custodians, and sub-custodial service agreements, while reinforcing sound custody and disclosure practices. This 2025 update supersedes the January 2023 guidance.