NYDFS warns regulated firms about sentiment-based virtual currencies

What changed

NYDFS directed regulated virtual-currency businesses to apply product-listing, governance, disclosure, and consumer-protection controls to rapidly proliferating sentiment-based virtual currencies, including so-called memecoins.

Who it affects

• New York-licensed virtual-currency businesses, their counterparties, investment advisers, and clients considering sentiment-based tokens

What is still open

• How DFS will assess particular listings, delistings, disclosures, and promotional practices

What it means for an advisor

• Apply heightened product, liquidity, manipulation, concentration, custody, and disclosure diligence before permitting client exposure.