- New York’s banking regulator now requires all state banks to use blockchain analytics for monitoring digital asset transactions.
- The directive extends compliance obligations beyond crypto firms, urging traditional banks to adopt tools like Chainalysis for risk screening.
New York is pushing traditional banks deeper into crypto compliance. The state’s Department of Financial Services (NYDFS) directed all state-chartered banks and licensed foreign branches to add blockchain analytics to their risk programs. The guidance, issued on September 17, extends tools once aimed mainly at virtual-currency firms to the broader banking sector.
“As traditional banking institutions expand into virtual currency activities, their compliance functions must adapt, onboarding new tools and technologies to mitigate new and different risks,” Harris stated.
The regulator framed the move as an adaptation to real activity. Banks now touch digital assets through customer flows and bank-run projects. Therefore, supervisors expect institutions to screen wallets, verify sources of funds from virtual-asset providers, and monitor exposure to money laundering and sanctions risks. In practice, banks will use vendors such as Chainalysis or Elliptic to trace flows and flag anomalies.
The department presented these steps as supervisory expectations rather than formal rules. Even so, the notice is specific. Firms should identify risks from third-party counterparties, compare expected versus actual customer behavior, and assess new product proposals before launch. Institutions must tailor controls to their business models and update them as conditions change. The message is clear: treat on-chain activity like any other financial data set—track it, test it, document it.
The guidance builds on earlier New York actions. Since April 2022, licensed crypto companies in the state have needed blockchain tracing for transaction monitoring. Since December 2022, banks have had to seek prior approval before starting new or materially different crypto-related activities. Together, these measures form a layered approach that leans on real-time telemetry instead of after-the-fact paper trails.
“Covered Institutions play a critical role in safeguarding the integrity of the financial ecosystem to prevent illicit activities like money laundering, terrorist financing, and sanctions evasion,” the department stated in its notice.
Meanwhile, New York continues to set a high bar for market entry. The BitLicense regime remains strict, backed by a team of more than 60 specialists in AML, fraud prevention, and blockchain.
In 2025, only two firms—MoonPay and Bullish—received licenses. For banks, the takeaway is practical: if they plan to offer digital-asset services, they must show they can see the flows, explain the flows, and stop the wrong flows. That is the price of admission.
