New York’s Financial regulator, NYFDS, has given crypto firms registered within this state one month to have submitted a preparedness plan for the COVID-19 pandemic.
The watchdog sent out letters to crypto entities it regulates which was followed by a state of emergency declaration by New York’s Mayor, Bill De Blasio.
These firms are required to outline how they plan to tackle short term and long-term operational risks amongst others as the world’s economy dips due to Coronavirus (COVID-19).
The letter sent out to over 15 firms regulated by the NYFDS partly reads;
“COVID-19 has already had adverse economic effects domestically and globally. It is critical that each regulated entity establish plans to address how it will manage the effects of the outbreak and assess disruptions and other risks to its services and operations.”
Markets across the world have been red with crypto also falling victim. These highly volatile assets lost over 30% this week despite stakeholders having faith that they would be a great alternative for value realization during black swan events. The NYFDS concern with players in this field is, therefore, no surprise given the industry’s brief history.
The NYFDS Risk Mitigation Proposal Outline
Crypto firms targeted by the NYFDS are required to highlight a minimum of 9 areas that pose an operational risk to their businesses. In addition, they should have 3 separate plans to tackle the identified shortcomings.
Basically, the operational outlook will cover company specifics that are exposed including probable solutions that can be implemented in a scalable manner. The NYDFS took this approach as it yet to quantify how much financial damage Coronavirus (COVID-19) has done and will do in the coming days.
This development means the likes of Ripple, BitPay and Coinbase will have to analyze the options of working remotely. Furthermore, the regulator requires them to update health protection tactics to prevent their employees from COVID-19 exposure.
Apart from coming up with a contingency plan, crypto firms operating in New York have to regularly check whether their suggested strategy is effective. As of reporting date, the number of reported COVID-19 cases in New York is below 100 but the city’s mayor, Bill de Blasio, might spike to 1000 hence the state of emergency.
Coinbase Ahead in COVID-19 Prevention
This San Fransisco based crypto exchange appears to have already taken initiatives to prevent more risks than the markets are already experiencing. Coinbase rolled out its contingency plan last month and it comprises four tiers; 0-3. At the moment, only Japan is at tier 1 with all the other subsidiaries still at 0. Ideally, all employees will work remotely in case it reaches a point where all outlet locations are placed in tier 3; this will probably be at the extremes of COVID-19.