Search company, investor...

Founded Year

2009

Stage

Loan | Alive

Total Raised

$36.67M

Last Raised

$3.5M | 4 yrs ago

About K2 Integrity

K2 Integrity operates as a risk advisory firm. The firm provides services such as financial crimes compliance, cyber risk management, crypto and digital assets solutions, strategic advisory services, and more. It serves industries such as financial services, law firms, healthcare, and more. It was formerly known as K2 Intelligence. It was founded in 2009 and is based in New York, New York.

Headquarters Location

730 Third Avenue

New York, New York, 10017,

United States

+1 202 558 0960

Loading...

Loading...

Latest K2 Integrity News

United States: NYDFS Issues Updated And Stricter Virtual Currency Listing Guidance – New Policy Updates Due For Approval By January 31, 2024 - K2 Integrity

Nov 24, 2023

Executive Summary Following a two-month public consultation period, on 15 November2023 the New York State Department of Financial Services (NYDFS)published its new Virtual Currency Listing Guidance (theGuidance),1 in accordance with virtual currencyregulation 23 NYCRR Part 200. The Guidance requires BitLicensedfirms and New York-chartered limited purpose trust companiesengaged in virtual currency business activity (collectively, VCEntities) to update their existing coin-listing policies anddevelop coin-delisting policies that are subject to formal NYDFSapproval by 31 January 2024. VC Entities that fail to developNYDFS-approved listing and delisting policies will be ineligible toself-certify2 tokens for listing in the state of NewYork. Further, the Guidance raises two new points with wide-rangingimplications for VC Entities: The NYDFS may "at any time and in its solediscretion, require VC Entities to delist or otherwise limit NewYorkers' access to coins that are not included on theGreenlist3 Accordingly, the Guidance requiresVC Entities to develop an acceptable coin-delisting policy thatwill enable the VC Entities to quickly discontinue support forhigh-risk coins in a manner that is consistent with safety andsoundness principles and with the protection of customers and thegeneral public. In an effort to introduce additional consumer protectionrequirements, the NYDFS additionally places newrestrictions on self-certification of coins possessing certainfeatures where such coins are made available for purchase by retailconsumers.4 The restriction spans a number ofcommon coin features, including any stablecoin that is not alreadyincluded on the Greenlist, exchange coins, coins posingcentralization and protocol resiliency concerns, bridged coins,coins with a limited circulating supply, and coins withanonymity-enhancing features. Together, these two points are likely to pose material businessand operational implications for VC Entities, particularlyexchanges, that serve New York retail customers, limiting theirability to sell certain popular coins to New York retail customers,including high-market-cap coins like Tether (USDT), Binance Coin(BNB), and USD Coin (USDC), which are currently not represented onthe NYDFS Greenlist. Notably, as part of its 18 September 2023press release that marked the start of the consultation period forthis Guidance, the NYDFS debuted a significantly amended Greenlist,reducing the number of Greenlisted coins from more than 20 to onlyeight.5 NYDFS-regulated VC Entities are now under tight timelines todevelop new delisting policies and preview these draftcoin-delisting policies with the NYDFS by 8 December2023. Further, VC entities will need to review theirexisting coin-listing policies to ensure that their policiesincorporate the risk assessment criteria articulated in the updatedGuidance. Where VC Entities serve New York retail customers, theywill also need to assess the impact of the Guidance and the updatedGreenlist on their list of supported coins and update accessrequirements for New York retail customers. While VC Entities willhave until 31 January 2024 tohave their updated coin listing and delisting policies formallyapproved by the NYDFS, all entities must be aware that the Guidanceis nonetheless effective immediately and entirely supersedes theprior 2020 NYDFS Guidance Regarding Adoption or Listing of VirtualCurrencies (Prior Guidance). What the Alert Covers This Policy Alert (1) provides a detailed overview of theguidance and (2) details key implications and considerations forNYDFS-regulated VC Entities. Detailed Overview In its 15 November 2023 press release associated with the newGuidance, the NYDFS noted that the Guidance "bolsters riskassessment standards for coin-listing policies and tailors enhancedrequirements for retail consumer-facingbusinesses. "6 Further, the press release notes thatthe new requirement for a coin-delisting policy helps ensure that"in the event a coin must be delisted, it can be done in anorderly way that protects consumers and minimizes marketdisruption. "7 While the NYDFS did not reveal aspecific impetus for updates to its coin-listing guidance, theNYDFS acknowledged that "the market has evolved sufficientlythat the Department found it prudent to further enhance therequirements of the Prior Guidance. "8 This reference to market evolution may be an implicit nod toboth the market frenzy of 2021 and the market contagion thatoccurred throughout 2022, precipitated by the May 2022 collapse ofTerra, an algorithmically collateralized stablecoin thatdisproportionately impacted less sophisticated retailinvestors9 and was widely regarded as the tipping pointfor the "2022 crypto winter" that continues to plague thevirtual currency industry in 2023. For this reason, perhaps, theGuidance focuses on preventing harm to retail investors and treatsmost stablecoins as coins possessing features that render themineligible for self-certification. The core of the Guidance imposes clear requirements on VCEntities. Specifically, the Guidance states that no VCEntity–even those VC Entities that had a previously approvedcoin-listing policy under the Prior Guidance–will bepermitted to self-certify any coins until they update theirexisting coin-listing policies and receive NYDFS approval on theircoin-delisting policies, consistent with the new standardsestablished under the Guidance. The Guidance articulates theminimum attributes required of an effective coin-listing policy,inclusive of: Governance: The establishment of a seniorGoverning Authority10 at the VC Entity that oversees theapproval of the coin-listing policy and review and approval (ordenial) of new coin listings. Governance includes independence andavoidance of conflicts of interest by the Governing Authority aswell as certain recordkeeping requirements around coin listingdecisions, consistent with the seven-year recordkeepingrequirements applicable to VC Entities under 23 NYCRR Part200. Risk Assessment: An assessment by the VCEntity of the various technology, operational, cybersecurity,market and liquidity, illicit finance, legal, reputational, andregulatory risks posed by a given coin prior to a coin-listingdetermination. Embedded in the risk assessment of a coin is theneed to take into consideration matters of customer protection to"ensure that all customers are treated fairly and are affordedthe full protection of all applicable laws and regulations,including protection from unfair, deceptive, or abusivepractices,"11 including, for instance, evaluatingnew coins against the risk of a rug pull. In addition to the coin-listing requirements which are generallyviewed as a "point in time" exercise by many VC Entities,the new Guidance clarifies that VC Entities are expected tomaintain policies and procedures to monitor listed coins and"ensure that continued listing of the coin remains consistentwith safety and soundness considerations, the protection ofcustomers and the general public. "12 These coinlisting policies and procedures should include periodicre-evaluation of the risks posed by a given coin and controlmeasures to manage those risks, as well as a coin-delisting policygoverning the delisting process should ongoing monitoring or othertriggers lead to a delisting decision. Further, the Guidanceclarifies that the coin-delisting policy should not be a standalonedocument, but rather one that is supported by robust procedurescomprehensively detailing the steps involved in removing supportfor a given coin. The Guidance similarly articulates the minimum attributesrequired of an effective coin-delisting policy, inclusive of: Effective management governance and oversight, A process around coin-delisting, including clear roles andresponsibilities, the chain of approval, and avoidance of conflictsof interest to prevent the risk of market manipulation and insidertrading, and Process execution, including: Advance notice to customers (at least 30 days prior todelisting), Customer support for impacted customers (including ensuringsufficient resources to respond to customer questions and requestsfor sale of the delisted coin in a timely manner), Adequate documentation, and Ongoing monitoring following delisting to identify potentialrisk exposures. Additionally, the Guidance stipulates that VC Entities ought toperform an impact analysis of the delisting decision to assess"second-order impacts a delisting decision might have on theVC Entity's internal business operations as well as on anycounterparties and third-party service . "13 TheGuidance articulates specific notice period requirements, both tothe NYDFS and consumers, in the event of a delisting decision, withsome carveouts for exigent circumstances. Moreover, as highlighted above, the Guidance establishesbarriers to self-certification for certain classes of coins andcoins exhibiting specific features if offered to New York retailcustomers. While the coin-listing requirements outlined in the Guidance arenot likely to materially impact existing coin-listing policies,many of which already incorporated the above governance and riskassessment criteria, the introduction of a coin-delisting policyand process requirement, combined with a reduction in Greenlistedcoins and more stringent requirements around self-certification forVC Entities serving retail users, are likely to Key Implications and Considerations Given that the new Guidance is effective as of 15 November 2023,NYDFS-regulated VC Entities are required to update their existingpolicies and processes in short order to meet the timelinesestablished in the new Guidance. K2 Integrity is reminding all VCEntities of the following key deadlines and next steps: Develop a draft coin-delisting policy and meet with theNYDFS on or before 8 December 2023 to obtain NYDFSfeedback on the draft coin-delisting policy, pursuant to therequirements of the NYDFS Guidance. Review and revise existing coin-listing policy andprocesses in accordance with the requirements of theGuidance to ensure appropriate process governance and coverage ofrisk assessment criteria, including incorporation of continuousmonitoring to ensure that coin-listing is not treated merely as apoint-in-time process. Submit final coin-delisting policy for NYDFS approvalon or before 31 January 2024, pursuant to the requirementsof the NYDFS Guidance, and be prepared to have a process orplaybook in place to execute the coin-delisting policyrequirements. Assess the business and operational impact of both theSeptember 2023 NYDFS Greenlist changes and the newself-certification limitations if you serve retailcustomers, including assessing one's existingportfolio of supported coins and determining whether additionalgeofencing and monitoring controls need to be implemented toprevent sales to New York retail customers. Assess resourcing to ensure sufficientstaffing to handle new continuous monitoring and customersupport requirements pursuant to the delisting policy requirementsraised in the new Guidance. Continue to monitor for updates to NYDFS guidance andGreenlisted coins, given that NYDFS has communicated thatthe Guidance is not exhaustive and may be updated from time totime. While the new Guidance imposes additional requirements, a keytheme raised throughout is how this Guidance incorporates themesfrom prior NYDFS-issued guidance, including the NYDFS's 2018"Guidance on Prevention of Market Manipulation and OtherWrongful Activity,"14 and its 2022 "Guidanceon Use of Blockchain Analytics. "15 The Guidancetherefore reiterates that the coin-listing process is one that isheavily risk-based and requires a holistic risk and controlframework. And while the virtual currency industry as a whole may,at times, face criticism over a casual approach to governance andmanagement oversight, the NYDFS continues to raise its expectationsfor VC Entities—requiring a carefully considered approach tocoin listing that is deeply rooted in governance and process. VCEntities will therefore have to work to comply with these newrequirements in short order while assessing the operational andbusiness impact of these recent changes on their approach to coinlisting and customer support going forward. Speak to K2 Integrity representatives from the Crypto and Digital Asset Solutionspractice to learn more about how K2 Integrity cansupport you and your firm in developing fit-for-purpose coinlisting and delisting policies, as well as help you with the coindue diligence/risk assessment process itself if you are facingcapacity constraints. Footnotes 1 NYDFS, "Guidance Regarding Listing of VirtualCurrencies" (15 November 2023), https://www.dfs.ny.gov/industry_guidance/industry_letters/il20231115_listing_virtual_currencies . 2 Self-certification is the term used by the NYDFS todescribe the process whereby VC Entities decide to list a new coin,pursuant to an NYDFS-approved coin listing policy, and thereby makethis newly listed coin available for approved virtual currencybusiness activity in the state of New York or to NewYorkers. 3 NYDFS, "Guidance Regarding Listing of VirtualCurrencies." The Greenlist refers to a circumscribed list ofcoins previously approved by the NYDFS. Unless otherwise advised bythe NYDFS, VC Entities do not require prior approval to list coinsincluded on the NYDFS Greenlist; however, entities that choose tolist Greenlisted coins are required to (1) provide advancenotification to the NYDFS prior to beginning support; and (2) havean NYDFS-approved coin-delisting policy. Refer to NYDFS,"General Framework for Greenlisted Coins"(18 September 2023), https://www.dfs.ny.gov/industry_guidance/industry_letters/il20230918_gen_framework_greenlisted_coins . 4 The NYDFS defines retail consumers as individuals whoare not subject to any pre-qualification factors such as income orcustomer type (e.g., accreditation requirements). Theself-certification restriction on retail consumers does not extendto VC Entities who offer institutional custody or services that areonly available to business users. 5 NYDFS, "General Framework for GreenlistedCoins." 6 NYDFS, "DFS Superintendent Adrienne A. HarrisAdopts New Regulatory Guidance Regarding the Listing of VirtualCurrencies," Press Release, 15 November 2023, https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202311151 . 7 Ibid. 8 NYDFS, "Guidance Regarding Listing of VirtualCurrencies." 9 Liu, J., Makarov, I., & Schoar, A, "Anatomy ofa Run: The Terra Luna Crash," National Bureau of EconomicResearch (April 2023), DOI: 10.3386/w31160, https://www.nber.org/papers/w31160 . 10 NYDFS, "Guidance Regarding Listing of VirtualCurrencies." The Guidance defines "GoverningAuthority" as the VC Entity's board of directors orequivalent, such as a committee formally delegated by the board ofdirectors, that is responsible for ensuring the robustness of thegovernance, monitoring, and oversight framework around coin listingand delisting. 11 NYDFS, "Guidance Regarding Listing of VirtualCurrencies." 12 Ibid. K&L Gates Investment advisers offering funds in more than one country are accustomed to adapting to different regulatory requirements. However, the challenges presented by the global regulation... WilmerHale On October 27, 2023, the Federal Trade FTC (FTC) approved amendments to its version of the Standards for Safeguarding Customer Information Rule (the Safeguards Rule)... Schulte Roth & Zabel LLP On Oct. 13, 2023, California Governor Gavin Newsom signed AB-39 into law ("Digital Financial Assets Law" or "Law"), which will require persons to obtain a license from the California... Greenberg Traurig, LLP The Consumer Financial Protection Bureau (CFPB) issued a proposed rule to establish its supervisory authority over certain large... Cadwalader, Wickersham & Taft LLP On September 19, 2023, the U.S. Treasury Department introduced nine guiding principles for private sector financial institutions that have made net-zero commitments.

K2 Integrity Frequently Asked Questions (FAQ)

  • When was K2 Integrity founded?

    K2 Integrity was founded in 2009.

  • Where is K2 Integrity's headquarters?

    K2 Integrity's headquarters is located at 730 Third Avenue, New York.

  • What is K2 Integrity's latest funding round?

    K2 Integrity's latest funding round is Loan.

  • How much did K2 Integrity raise?

    K2 Integrity raised a total of $36.67M.

  • Who are the investors of K2 Integrity?

    Investors of K2 Integrity include Paycheck Protection Program, American International Group, RRE Ventures and Bessemer Venture Partners.

  • Who are K2 Integrity's competitors?

    Competitors of K2 Integrity include ComplyAdvantage and 5 more.

Loading...

Compare K2 Integrity to Competitors

F
Financial Risk Mitigation

Financial Risk Mitigation (FRM) is a corporate investigative firm. It offers accounting, alternative investments, anti-bribery, asset-based lending, litigation, and more. It was founded in 2004 and is based in Metairie, Louisiana.

AML RightSource Logo
AML RightSource

AML RightSource is a company that specializes in Anti-Money Laundering (AML) and Bank Secrecy Act (BSA) compliance within the financial crimes sector. The company offers services such as transaction monitoring, alert backlog management, and enhanced due diligence reviews, all aimed at assisting banks and non-bank financial institutions in meeting their day-to-day compliance tasks. The company primarily serves the banking and non-bank financial institutions sector. It is based in Cleveland, Ohio.

Huntli Logo
Huntli

Huntli is a company that focuses on financial fraud prevention and compliance in the financial services industry. The company offers an all-in-one solution that includes features such as live transaction monitoring, risk management, and compliance dashboards, which help in detecting and blocking fraudulent activities, managing individual user-profiles, and screening for potential risks associated with financial crimes. The company primarily serves the financial services industry. It is based in Riga, Latvia.

Hawk:AI Logo
Hawk:AI

Hawk:AI develops and operates a cloud-based software solution for the automated detection of suspected cases of financial crime. It allows financial institutions to improve transaction surveillance and ensure regulatory compliance. It offers payment screening, customer screening, customer risk rating, and tax monitoring solutions for retail and corporate banking, neo-banks, payment companies, and financial technology. The company was founded in 2018 and is based in Munich, Germany.

S
Schwarzthal Tech

Schwarzthal Tech is building solutions to tackle financial crime using AI and algorithms. The platform provides intelligence solutions based on network assessment, data linkage, flow aggregation, and machine learning.

N
Napier

Napier offers an online computer software for compliance that strengthens AML defenses and trade capabilities while minimizing risk. Napier was founded in 2015 and is based in London, U.K.

Loading...

CBI websites generally use certain cookies to enable better interactions with our sites and services. Use of these cookies, which may be stored on your device, permits us to improve and customize your experience. You can read more about your cookie choices at our privacy policy here. By continuing to use this site you are consenting to these choices.