New rules clarify custody standards and customer protections amid leadership change
With less than two weeks before stepping down, New York Department of Financial Services (NYDFS) Superintendent Adrienne Harris has issued an update to the state’s crypto custody guidance. The revisions aim to strengthen protections for users in the event of insolvency or similar proceedings, building on earlier guidance introduced in January 2023.
The updated framework provides clearer standards for “acceptable sub-custodians,” custody practices, and permissible uses of customer assets.
“As we see the use of more sub-custodial relationships in the digital asset space, this guidance provides additional clarity on how those relationships should be governed,” Harris said in Tuesday’s notice.
The NYDFS stressed that custodians must keep client assets in separate on-chain wallets or omnibus wallets with internal ledger accounts. Importantly, the regulator reaffirmed that customer crypto cannot be used for purposes such as securing credit, reinforcing a key safeguard against misuse.
Leadership Transition
Harris announced the changes less than 24 hours after Governor Kathy Hochul confirmed her upcoming departure on October 18, ending a nearly four-year tenure. She will be succeeded in an acting capacity by Kaitlin Asrow, currently executive deputy superintendent.
The leadership change marks a pivotal moment for the NYDFS, which oversees one of the most influential crypto regulatory frameworks in the U.S. The department’s BitLicense program, launched in 2015, remains a requirement for any digital asset business operating in New York.
Broader Political Context
The update also comes as New York City Mayor Eric Adams announced he will not seek reelection in 2025. Adams, known for receiving his first three paychecks in Bitcoin, has been a vocal supporter of crypto adoption and has criticized the BitLicense regime as overly restrictive.
As Harris prepares to step down, the NYDFS is reinforcing its reputation as a leading crypto watchdog. The updated guidance highlights the state’s focus on clear custody rules and investor protections, even as leadership transitions bring fresh uncertainty to the regulatory landscape.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.