Industry Letter — Notice Regarding Rapidly Proliferating, Sentiment-Based Virtual Currencies

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Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.

Industry Letter - January 16, 2025: Notice Regarding Rapidly Proliferating, Sentiment-Based Virtual Currencies | Department of Financial Services

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Industry Letter
January 16, 2025
TO: All Virtual Currency Business Entities Licensed under 23 NYCRR Part 200 or Chartered as Limited Purpose Trust Companies under the New York Banking Law
FROM: Adrienne A. Harris, Superintendent of Financial Services
RE: Notice Regarding Rapidly Proliferating, Sentiment-Based Virtual Currencies
The New York State Department of Financial Services (“Department”) is closely monitoring the rapid proliferation of sentiment-based virtual currencies. The platforms that enable the creation of these coins are not licensed by the Department and therefore are not subject to the rigorous virtual currency standards we have in place to protect consumers in the State. In addition, these coins often are owned by a few individuals or groups of individuals associated with the creator and are not broadly traded. Moreover, sentiment-based coins tend to be subject to significant price volatility.
Coins that carry these characteristics generally are incompatible with the Department’s Guidance on Coin-Listing and on Market Manipulation, in that they carry significant regulatory, market, and legal risk, and may be favorable instruments for the facilitation of illicit finance.1 Certain of these coins have reportedly also led to significant losses of consumer funds, due to wash trading, pump-and-dump schemes, and other forms of market manipulation by insiders and others. Such coins may, in addition, be characterized by poor security standards, including rushed or incomplete code development and a lack of diligence regarding code-based vulnerabilities.
The Department requires regulated entities engaged in virtual currency business activity to comply with all applicable laws and regulations, including, without limitation, the Department’s virtual currency regulation (23 NYCRR Part 200), and to follow all applicable guidance, including the Department’s guidance on Coin-Listing and on Market Manipulation. The Department will continue to closely monitor its regulated entities and, as appropriate, will take supervisory and enforcement action to ensure Virtual Currency Business Entities follow all applicable laws and regulations. 
1 See e.g., NYDFS, Industry Letter: Guidance on Listing of Virtual Currencies (Nov. 15, 2023); and NYDFS, Industry Letter: Guidance on Prevention of Market Manipulation and Other Wrongful Activity (Feb. 7, 2018).

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