In 2017, BitFlyer USA, a subsidiary of BitFlyer Holdings, received a license from the New York regulator allowing the exchange to provide local traders with cryptocurrency trading and custody services.
The license was obtained in accordance with the Virtual Currencies Regulation and the Cybersecurity Regulation.
However, the NYDFS conducted an investigation into BitFlyer, saying the exchange did not fully comply with those rules.
NYDFS alleges that BitFlyer’s U.S. unit failed to conduct a comprehensive risk assessment and that its cybersecurity program does not fully protect the exchange’s electronic systems from unauthorized use.
The agency demanded that the exchange address the deficiencies identified and improve its cybersecurity program by Dec. 31, 2023.
Note that in 2020, NYDFS expressed a willingness to make it easier for digital asset companies to obtain a BitLicense license.
Nevertheless, the agency maintains a strict position on the regulation of the cryptocurrency market, applying strict measures against cryptocompanies.
In February, the NYDFS became interested in the activities of Paxos Trust. The regulator later demanded that it stop issuing new BUSD Stablecoins out of concern that they might be unregistered securities.