New York’s top financial regulators have encouraged banks to adopt blockchain analytics, showing more stringent surveillance of crypto-related risks.
The move reflects regulators’ concerns that traditional agencies face increased exposure to digital assets. Companies from cryptographic origins already rely on surveillance tools, but the Ministry of Financial Services now expects banks to use them to detect illegal activities.
NYDFS outlines compliance expectations
Notices issued by Principal Adrienne Harris on Wednesday apply to all state banks and foreign branches. In an industry letter, the New York Department of Financial Services (NYDFS) emphasized the need to integrate blockchain analytics into compliance programs, depending on the size, operational and risk appetite of each bank.
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Regulators warned that the crypto market is evolving quickly and that agencies will require regular updates to their frameworks.
“New technologies introduce evolving threats that require strengthening surveillance tools,” the notification states.
It highlighted the need for banks to prevent money laundering, sanctions violations, and other illegal finances related to cryptocurrency transactions. Therefore, the department has listed specific areas where blockchain analysis can be applied.
Screening of customer wallets with cryptographic exposure to assess risk. Examining the origins of funds from virtual asset service providers (VASPs). Comprehensively monitor the ecosystem to detect exposure to money laundering or sanctions. Identify and evaluate counterparties such as third-party vasps. An estimate of actual transaction activity, including dollar thresholds. A metering of risk tied to new digital asset products prior to rollout.
These examples highlight how agencies coordinate monitoring tools to enhance their risk management frameworks.
This guidance expands NYDFS’s Cryptocurrency-Related Activities (VCRA) framework, managing state crypto monitoring since 2022.
Regulators show wider impact
The Market Observer says the notice is not about new rules, but about clarifying expectations. By formalizing the role of blockchain analytics in traditional finance, New York reinforces the idea that banks cannot treat crypto exposure as a niche concern.
Analysts also believe this approach can ripple beyond New York. Federal agencies and regulators in other states may view guidance as a blueprint for coordinating the reality of digital asset adoption and bank surveillance. In the case of institutions, failure to adopt blockchain intelligence tools can lead to regulatory scrutiny and undermine their ability to protect their customers’ trust.
With Crypto firmly embedded in global finance, New York’s stance suggests that blockchain analytics is no longer an option for banks. These are essential to protecting the integrity of the financial system.
