The New York Department of Financial Services recently published proposed regulations which would require virtual currency businesses operating in New York State to safeguard data and protect customer privacy.

Notably, the proposed regulations include requirements for virtual currency business to maintain cyber security programs and business continuity and disaster recovery plans.

Virtual currencies under the regulations include decentralized digital currencies (such as Bitcoin), as well as centrally issued or administered digital currencies and those that can be created by computerized or manufacturing effort (e.g. Bitcoin mining). Virtual currencies would not include digital units used in online gaming platforms that are of no value outside the gaming environment, nor would they include affinity and rewards program points that cannot be converted or redeemed for government issued currency.

Cyber security programs, very similar to written information security programs which we have previously discussed, would be required to be in writing and must ensure the availability and functionality of the business’s electronic systems and to protect those systems and any sensitive data stored on those systems from unauthorized access, use, or tampering. The cyber security program must perform five core cyber security functions:

  1. identify internal and external cyber risks;
  2. protect the business’s electronic systems, and the information stored on those systems, from unauthorized access, use, or other malicious acts;
  3. detect systems intrusions, data breaches, unauthorized access to systems or information, malware, and other Cyber Security Events;
  4. respond to detected Cyber Security Events to mitigate any negative effects; and
  5. recover from Cyber Security Events and restore normal operations and services.

Similarly, the cyber security policy must address the following areas:

  1. information security;
  2. data governance and classification;
  3. access controls;
  4. business continuity and disaster recovery planning and resources;
  5. capacity and performance planning;
  6. systems operations and availability concerns;
  7. systems and network security;
  8. systems and application development and quality assurance;
  9. physical security and environmental controls;
  10. customer data privacy;
  11. vendor and third-party service provider management;
  12. monitoring and implementing changes to core protocols not directly controlled by the business, as applicable; and
  13. incident response.

Some other key provisions of the cyber security program include the identification of a Chief Information Security Officer (“CISO”) — who is responsible for overseeing and implementing the cyber security program and enforcing its cyber security policy — as well as audit functions, which include annual penetration testing of the business’s electronic systems and audit trail systems to track and maintain data.

A 45-day public comment period began upon the publication of the proposed regulations.

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Photo of Jason C. Gavejian Jason C. Gavejian

Jason C. Gavejian is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. and co-leader of the firm’s Privacy, Data and Cybersecurity practice group. Jason is also a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy…

Jason C. Gavejian is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. and co-leader of the firm’s Privacy, Data and Cybersecurity practice group. Jason is also a Certified Information Privacy Professional (CIPP/US) with the International Association of Privacy Professionals.

As a Certified Information Privacy Professional (CIPP/US), Jason focuses on the matrix of laws governing privacy, security, and management of data. Jason is co-editor of, and a regular contributor to, the firm’s Workplace Privacy, Data Management & Security Report blog.

Jason’s work in the area of privacy and data security includes counseling international, national, and regional companies on the vast array of privacy and security mandates, preventive measures, policies, procedures, and best practices. This includes, but is not limited to, the privacy and security requirements under state, federal, and international law (e.g., HIPAA/HITECH, GDPR, California Consumer Privacy Act (CCPA), FTC Act, ECPA, SCA, GLBA etc.). Jason helps companies in all industries to assess information risk and security as part of the development and implementation of comprehensive data security safeguards including written information security programs (WISP). Additionally, Jason assists companies in analyzing issues related to: electronic communications, social media, electronic signatures (ESIGN/UETA), monitoring and recording (GPS, video, audio, etc.), biometrics, and bring your own device (BYOD) and company owned personally enabled device (COPE) programs, including policies and procedures to address same. He regularly advises clients on compliance issues under the Telephone Consumer Protection Act (TCPA) and has represented clients in suits, including class actions, brought in various jurisdictions throughout the country under the TCPA.

Jason represents companies with respect to inquiries from the HHS/OCR, state attorneys general, and other agencies alleging wrongful disclosure of personal/protected information. He negotiates vendor agreements and other data privacy and security agreements, including business associate agreements. His work in the area of privacy and data security includes counseling and coaching clients through the process of investigating and responding to breaches of the personally identifiable information (PII) or protected health information (PHI) they maintain about consumers, customers, employees, patients, and others, while also assisting clients in implementing policies, practices, and procedures to prevent future data incidents.

Jason represents management exclusively in all aspects of employment litigation, including restrictive covenants, class-actions, harassment, retaliation, discrimination, and wage and hour claims in both federal and state courts. He regularly appears before administrative agencies, including the Equal Employment Opportunity Commission (EEOC), the Office for Civil Rights (OCR), the New Jersey Division of Civil Rights, and the New Jersey Department of Labor. Jason’s practice also focuses on advising/counseling employers regarding daily workplace issues.

Jason’s litigation experience, coupled with his privacy practice, provides him with a unique view of many workplace issues and the impact privacy, data security, and social media may play in actual or threatened lawsuits.

Jason regularly provides training to both executives and employees and regularly speaks on current privacy, data security, monitoring, recording, BYOD/COPE, biometrics (BIPA), social media, TCPA, and information management issues. His views on these topics have been discussed in multiple publications, including the Washington Post, Chicago Tribune, San Francisco Chronicle (SFGATE), National Law Review, Bloomberg BNA,, @Law Magazine, Risk and Insurance Magazine, LXBN TV, Business Insurance Magazine, and

Jason is the co-leader of Jackson Lewis’ Hispanic Attorney resource group, a group committed to increasing the firm’s visibility among Hispanic-American and other minority attorneys, as well as mentoring the firm’s attorneys to assist in their training and development. He also previously served on the National Leadership Committee of the Hispanic National Bar Association (HNBA) and regularly volunteers his time for pro bono matters.

Prior to joining Jackson Lewis, Jason served as a judicial law clerk for the Honorable Richard J. Donohue on the Superior Court of New Jersey, Bergen County.