TechFlow, October 1 — According to Financefeeds, the New York State Department of Financial Services (NYDFS) has released updated guidance for licensed virtual currency custodians (VCEs), requiring custodial firms to ensure that beneficial ownership of digital assets always remains with customers, even in the event of bankruptcy.
The 2025 revised guidance clarifies NYDFS's standards for virtual currency businesses that engage sub-custodians and specifies required provisions in sub-custody service agreements. The guidance emphasizes that custodians must not use customer assets in ways that could impair customer ownership rights or bankruptcy priorities, including prohibitions on rehypothecation, securities lending, or unsecured lending.
This guidance takes effect immediately and replaces the custody guidance issued by NYDFS in January 2023.
