NYDFS Extends Blockchain Analytics Expectations to NY-Regulated Banks. Here’s What You Need to Know.

Today, the New York State Department of Financial Services (NYDFS) issued new guidance explicitly extending expectations around the use of blockchain analytics tools by banking organizations in NY that are considering or already doing virtual currency-related business.

Here’s a breakdown of what the guidance calls for, why it matters, and how institutions can meet it.

What NYDFS is saying

Superintendent Adrienne A. Harris emphasized that as more banks enter or expand virtual currency activity, their compliance programs must adapt to mitigate new or evolving risks. Specifically, NYDFS expects banking orgs to consider incorporating blockchain analytics as an additional risk management tool that compliments and augments existing control programs. The NYDFS called out some specific use cases where blockchain analytics can help provide valuable information, including:

• Customer wallet screening and source of funds verification to assess risk exposure for customers with a material nexus to virtual currency activity and wealth
• Holistic monitoring for illicit activity exposure, including risk coming via third party transactional activity
• Augmenting due diligence controls to compare expected vs. actual customer behavior (thresholds, volumes, etc.) for crypto activity
• Weighing risks associated with new virtual currency products or services before offering them

In short: NYDFS is signaling that banks can’t treat virtual asset / Virtual Asset Service Provider (VASP) / wallet exposures as fringe matters that can be mitigated with existing tools and processes. They expect proactive risk identification, built-in controls, and ongoing monitoring.

Why this matters

• Regulatory alignment and risk exposure: As banks get more crypto exposure (via customers, counterparties, product offerings), unaddressed gaps can lead to regulatory, financial, or reputational risk.
• Clarity of expectations: The guidance makes clear that blockchain analytics is not optional if you're doing virtual currency activity in NY — it's expected.
• Due diligence and documentation: You not only need tools; you need policies, processes, thresholds, and monitoring in place — and be able to show them.

{{callout-nydfs-blockchain-analytics-expectations-1}}

Blockchain analytics is now a non-negotiable

The NYDFS guidance makes one thing clear: for banks operating in NY, blockchain analytics no longer sits on the sidelines — it’s a core part of compliance if you're doing virtual currency or VASP-adjacent business.

At TRM Labs, our mission is helping financial institutions meet exactly these kinds of supervisory expectations — by delivering tools, workflows, and frameworks that make crypto risk visible, manageable, and defensible.

If you'd like to see how your program aligns relative to NYDFS’s guidance, our Crypto Compliance Program Guide for Financial Institutions is a great resource to benchmark against.