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NY regulator issues virtual currency guidance to prevent market manipulation

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NY regulator issues virtual currency guidance to prevent market manipulation

The New York Department of Financial Services issued guidance to all virtual currency business entities to prevent market manipulation and other forms of wrongdoing.

The guidance applies to businesses licensed or chartered as a limited purpose trust company under New York banking law, including companies holding money transmitter licenses.

The two-page guidance states that companies must include a written policy that identifies and assesses the full range of fraud-related and similar risk areas, including market manipulation; provides effective procedures and controls; allocates responsibility for monitoring risks; and provides for periodic evaluation and revision of the procedures, controls and monitoring mechanisms.

In addition, upon the discovery of wrongdoing, a company must submit to the department a report with all details known at the time of the report and updates as more details emerge.

"As the cryptocurrency markets continue to evolve, [the department] is directing virtual currency companies to take the necessary steps to guard against fraud, and to be extra vigilant about manipulation," Superintendent Maria Vullo wrote in a statement. "By these actions, the market can evolve with strong regulatory supervision."