• 18 crypto companies like Ripple received a letter from the New York regulator ordering them to submit their emergency plan against the Coronavirus. 
• The emergency plan should indicate how companies will deal with the Coronavirus crisis to prevent their services and operations from being compromised.

In a letter dated March 10, the New York Department of Financial Services (NYDFS) notified 18 regulated entities that they must submit a Coronavirus emergency plan. The entities are related to Bitcoin and other cryptocurrencies and include Ripple, Coinbase, Robinhood, Gemini, Square, among others.

Guidelines that Ripple and other companies should include in their emergency plan

According to the letter, DFS needs to ensure that regulated entities are prepared for the threat of the Coronavirus known as COVID-19. The spread of this disease throughout the world has had negative consequences for the global financial markets and the cryptomarket. DFS states in the letter:

It is critical that each regulated entity establish plans to address how it will manage the effects of the outbreak and assess disruptions and other risks to its services and operations.

Therefore, companies under DFS regulation must submit their emergency plan within 30 days. Each company’s plan should describe what the potential risks are and how they will deal with the COVID-19 emergency. In addition, DFS asked companies to include in their plan a method for monitoring the financial risk that the disease has caused.

The DFS added that the plans to be submitted must meet certain criteria. Plans must be flexible and consider what measures are most effective to mitigate the effects that could result from further expansion of COVID-19. Companies must indicate the level of complexity at which they operate, the size of the company, and what activities they undertake. In addition, the DFS requires the inclusion of 9 points that will serve to measure the effectiveness of the plans delivered:

1. Companies must take measures to prevent their operations from being affected.
2. A multi-stage strategy on the impact of COVID-19 should be included.
3. Companies should evaluate all procedures to maintain their essential operations.
4. Assess what the risk will be of an increase in cyber attacks and fraud.
5. Companies should create strategies to protect their employees and maintain an adequate workforce to continue operations.
6. Assess how their external providers are prepared.
7. Develop a communication plan with employees, customers, and other parties.
8. Test the effectiveness of the plan.
9. Supervise and identify company members who will be needed to implement the plan.

In addition, companies should assess how COVID-19 will affect their investments, earnings, liquidity and capital. DFS also states that companies should prepare to implement higher security measures and adds:

We would also underscore the possibility of custody risk for Virtual Currency, such as the possible need for special arrangements to move Virtual Currency from “cold” to “hot” wallets during times when employees may not all be working from their usual locations.  We would also remind you that your institutions may have obligations to notify DFS if positive net worth falls below a certain threshold above the minimum required capitalization.

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