The NYDFS ordered BitFlyer USA to pay a $1.2 million penalty after finding "multiple deficiencies" in its cybersecurity program.
The New York State Department of Financial Services (NYDFS) ordered the cryptocurrency exchange BitFlyer USA to pay a $1.2 million fine for not abiding by the state’s cybersecurity regulations.
However, the watchdog endorsed the company’s efforts to upgrade itself in that field by the end of 2023.
The NYDFS Strikes Again
New York’s regulator enforced the penalty after discovering “multiple deficiencies” in the cybersecurity program of BitFlyer USA. It reminded that the NYDFS is the main watchdog in the state, and as such, its Superintendent has the authority to conduct investigations and impose fines if necessary.
“Through its examinations and investigation, the Department found that BitFlyer USA failed to meet its regulatory obligations both by failing to fully comply with the Department’s Cybersecurity Regulation and by failing to establish and maintain an effective cybersecurity program via the implementation of written policies, as required by the Virtual Currency Regulation,” the NYDFS stated.
BitFlyer must pay the fine within ten days after the effective date of the consent order. It should not “claim, assert, or apply for a tax deduction or tax credit with regard to any US federal, state, or local tax, directly or indirectly, for any portion of the civil monetary penalty,” the regulator outlined.
Despite the penalty, the NYDFS highlighted BitFlyer’s ambition to cope with the regulatory issues. The platform displayed a remediation plan, which could make it compliant with the necessary rules by the end of the year.
The NYDFS’ Latest Requirements
Payments will be taken five times per year (four estimated quarterly settlements and one based on the actual expenses).
The legislation aims to align cryptocurrency organizations more closely with banks and insurance firms since they are also subjects of such billing. Superintendent Adrienne Harris believes crypto businesses could benefit from the collaboration with the regulator:
“When you can work hand-in-hand with your regulator and your examiners, we can help identify issues early before they metastasize, and it really is a service that we can provide to the industry, and it helps us as regulators better oversee the markets and protect consumers.”