The New York State Department of Financial Services directed banks on Wednesday to use blockchain analytics to combat illegal activities, citing an uptick in interest in digital assets.
The NY financial regulator’s latest guidance follows a statement made in 2022 encouraging firms registered in the state to use blockchain technology.
“As traditional banking institutions expand into virtual currency activities, their compliance functions must adapt, onboarding new tools and technologies to mitigate new and different risks,” said NYDFS Superintendent Adrienne Harris in a statement.
NYDFS advised banks to consider using blockchain analytics when screening customers’ wallets for risks, considering risks with digital asset products that are set to be offered, among other instances.
“Emerging technologies introduce new and evolving threats that require new tools, such as blockchain analytics, with enhanced capabilities to aid risk identification and mitigation,” NYDFS said. “With increasing virtual currency adoption, Covered Institutions play a critical role in safeguarding the integrity of the financial ecosystem to prevent illicit activities like money laundering, terrorist financing, and sanctions evasion.”
Earlier on Wednesday, NYDFS issued a BitLicense and Money Transmission License to crypto market infrastructure and information services firm Bullish.
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