A State of Emergency: The Crypto Industry’s New Reality

As New York City’s mayor, Bill de Blasio, dropped the bombshell of a state of emergency due to the coronavirus outbreak, he left the crypto industry—and everyone else—scrambling like a cat on a hot tin roof. “The only analogy is war,” de Blasio said, and let’s be honest, the consequences for businesses in the crypto world are serious enough that even Bitcoin might shed a tear if it had feelings.

NYDFS Calls for Preparedness Plans

Even before the sirens blared, the New York Department of Financial Services (NYDFS) was sending out warnings like a middle school teacher handing out pop quizzes. On March 10, they demanded that regulated institutions engaged in crypto-related activities draft detailed “preparedness plans” to fend off the historic risks posed by a global pandemic.

“COVID-19 has already had adverse economic effects domestically and globally,” they warned, making it clear that business as usual was no longer an option.

What’s in the Plan? A Multi-Pronged Approach

The NYDFS instructed crypto firms to whip up their plans in a hurry—definitely before the next full moon, but definitely no later than 30 days after their letter. Businesses need to cover nine critical areas to address operational risks.

• Customized Prevention: Identify and mitigate risks tailored to your business.
• Phased Pandemic Procedures: Roll out your strategy in manageable stages.
• Staff & Security Assessment: Prepare for operations with limited personnel and secure remote work.
• Health Protection Strategies: Keep staff healthy or you might as well close up shop.
• Communication Plans: Customers and partners need to be kept in the loop—no one likes radio silence.

Oh, and don’t forget to monitor information from government sources like a hawk with caffeine jitters—because things are changing every minute.

Financial Stability: Plan B is crucial

Given the pandemic’s ripple effects, the NYDFS pointed out that regulated crypto businesses are now facing troubles like a game of Jenga where every block is labeled “risk.” Declining revenues, stock market roller coasters, and service disruptions are all on the table. The NYDFS requires businesses to have at least a minimal 3-point plan in their financial arsenal.

• Valuation Assessment: Take a good look at your assets and see how their value has been twisted by this virus.
• Earnings Analysis: Understand how current events could hit profits, capital, and liquidity.
• Continual Monitoring: Because nothing says preparedness like keeping an eye on the chaos.

Cybersecurity Concerns Amid Crisis

In addition to their operational and financial strategies, NYDFS highlighted a surge in cybersecurity threats. As the world goes digital (and we all start working in our pajamas at home), hacking attempts are likely as bad actors look to capitalize on the chaos.

Firms should heighten security measures, including better triggers for detecting fraudulent trading. Because honestly, who needs more bad news right now?

The Cancellation Domino Effect

As if life wasn’t wild enough, the pandemic has thrown a wrench in numerous crypto events, forcing many to be canceled, postponed, or moved online. It seems that even the industry benchmarks are going virtual while we try to flatten the curve.

In the end, the NYDFS reminded businesses that they’re required to notify the department if their net worth takes a nosedive. Let’s hope it doesn’t come to that—it’s already too much to handle!