The New York Department of Financial Services (NYDFS) sent a letter to the approximate 18 cryptocurrency firms it regulates saying they have 30 days to submit a contingency plan in the face of the coronavirus epidemic.
The March 10 letter outlined nine items that the agency expects cryptocurrency companies to include it the plan, such as how operational disruptions would be handled and what is being done to protect its employees.
“COVID-19 has already had adverse economic effects domestically and globally. It is critical that each regulated entity establish plans to address how it will manage the effects of the outbreak and assess disruptions and other risks to its services and operations,” the letter said.
The agency also warned in the letter that the crypto market is particularly vulnerable to fraud and corruption that could come from fraudsters looking to take advantage of the coronavirus outbreak, warning of “increased instances of hacking, cybersecurity threats, and similar events, as bad actors attempt to take advantage of a COVID-19 outbreak, and the possible resulting need for heightened security measures, such as enhanced triggers for fraudulent trading or withdrawal behavior.”
In advance of the formal request by the NYSDFS, Coinbase in February had already submitted a coronavirus contingency plan.
“We have a standing Crisis Management Team continually reviewing new information as it comes in. We have established a four-tier escalation ladder (from tier 0 to tier 3) in response to changes that impact Coinbase offices,” according to the plan.
In the last tier, all employees would be required to work from home. All of the exchange’s offices are in tier 0, except for Japan, which is tier 1. Coinbase has also restricted travel to China, Hong Kong, Japan, Italy and South Korea.
“Our expectation is that the measured mortality rate (once low-severity cases are included in the overall count) will fall significantly and that we’ll see limited transmission in the west, where there will be fewer high-density multi-generational housing situations.”
A massive sell-off in risk assets due to coronavirus fears triggered a drop in bitcoin to below $4,000, the lowest level since March 25, 2019. The cryptocurrency now has a 27 percent loss YTD, despite gaining 46 percent in February when it was trading at $10,500.