The New York State Department of Financial Services (NYDFS) has recently updated its regulatory guidance, providing significant clarity for banking organizations entering the digital asset sector. This guidance, which took effect on September 17, 2025, extends previously established blockchain analytics standards, applying them to both New York banks and licensed foreign bank branches. This move aligns with NYDFS’s proactive approach toward digital asset regulation and aims to solidify a consistent compliance framework across traditional banking institutions and crypto-centric businesses.
Previously, in April 2022, NYDFS mandated that licensed virtual currency businesses in New York integrate blockchain analytics within their compliance processes. This initial guidance emphasized the importance of these analytical tools for customer due diligence, transaction monitoring, and sanctions screening, which have since been adopted by virtual currency entities under NYDFS oversight.
The newly revised 2025 guidance encourages banks involved in or planning to engage with Virtual Currency-related Activity (VCRA) to utilize the 2022 blockchain analytics standards. The emphasis is on managing the growing risk associated with virtual currencies, especially as banks increasingly offer services related to digital assets or engage with customers in the crypto space. In an era where transactions increasingly occur on-chain, having robust analytical capabilities is essential for effective risk management across various types of financial activities.
NYDFS identifies specific areas where banks can benefit from blockchain analytics, including:
– Screening the wallets of customers engaged in crypto transactions
– Verifying sources of funds from Virtual Asset Service Providers (VASPs)
– Monitoring customer exposure to financial crimes within the crypto ecosystem
– Identifying risks associated with third parties
– Evaluating transaction patterns compared to expected activity
– Conducting comprehensive risk assessments
– Assessing the suitability of virtual currency products or services offered
These applications extend beyond compliance, enabling banks to gain insights into customers’ crypto activities outside traditional banking channels. This visibility enhances the assessment of VASP counterparties and allows banks to scrutinize transaction patterns against customer intentions, uncovering potential red flags. Moreover, by utilizing sandbox environments, banks can understand counterparty behaviors and refine their risk approaches before launching new digital asset products.
The alignment of tools and frameworks fosters a more cohesive ecosystem between banks and digital asset companies. This unified approach facilitates the sharing of threat intelligence, addressing risks that could be exploited in both traditional and digital financial landscapes. By bridging the gap between on-chain and off-chain data, banks can gain comprehensive insights into crypto-related risks.
Furthermore, blockchain analytics can drive innovation in product development. Examples from companies like Robinhood, Stripe, and Revolut illustrate how integrating on-chain and off-chain functionalities can produce compelling offerings for both retail and institutional customers. This regulatory guidance empowers banks to enter the digital asset market more competently while establishing robust compliance standards for products such as digital asset custody, trading services, and crypto-enabled payment solutions.
Operational efficiencies also see improvement through the use of standardized tools and analytics platforms, which streamline partnerships between banks and VASPs. This alignment enhances intelligence sharing, ultimately creating a safer, more productive environment for all players in the industry.
Since the 2022 guidance was issued, Elliptic has played a vital role in supporting virtual currency businesses in adhering to NYDFS standards through comprehensive blockchain analytics solutions. For banks beginning to implement blockchain analytics, Elliptic offers specialized training, risk assessment tools, extensive blockchain coverage, and seamless API integration with existing systems, backed by regulatory expertise.
As banks refine their VCRA strategies in line with the updated guidance, choosing the right blockchain analytics partner is critical. The same tools that have empowered crypto businesses under NYDFS regulations are now accessible to banks, allowing them to navigate the evolving digital asset landscape with assurance. Whether preparing for VCRA, developing regulatory frameworks, or building partnerships within the banking sector, relying on experienced blockchain analytics solutions can facilitate adherence to NYDFS standards.
