The New York State Department of Financial Services (NYDFS) is taking matters into its own hands when it comes to cryptocurrency. As the financial regulator for the Big Apple, it has largely employed in-house workers to oversee all crypto-related activities and businesses within the state’s borders, but now those duties are being moved to a separate division.
New York – The Newest Crypto Haven?
This could either be very positive or very negative. On the one hand, further regulation is needed if bitcoin and assorted altcoins are to ever receive legitimacy in the financial space. They cannot attract the right investors, nor can they ever compete with fiat currencies like the U.S. dollar unless people believe they are strong enough to do so.
At the same time, New York has largely possessed a very anti-crypto attitude up to this stage. The state’s now infamous BitLicense, which sought to impose additional taxes on cryptocurrency businesses as well as registration fees, was largely thought to be the biggest opponent to crypto-based innovation within the state of New York. As a result, many blockchain enterprises subsequently left and aren’t bent on returning anytime soon.
Among those to speak out against the BitLicense procedure was Shape Shift CEO Erik Voorhees, who commented:
Here we are two miles from the Statue of Liberty, and you cannot sell Crypto Kitties in the state without that license. That’s the absurdity of what’s happened here.
Yesterday, newly appointed superintendent Linda Lacewell released a statement explaining how New York would be overseeing and monitoring all crypto business activity from here on out. Many related duties will now be placed in the hands of the Research and Innovation Division at the Department of Financial Services. Those involved will “track emerging financial technologies” and provide the necessary licenses to companies seeking entry to the crypto space.
The statement reads:
This division will oversee the virtual currency licensing process and will encourage development in the area… The financial services regulatory landscape needs to evolve and adapt as innovation in banking, insurance and regulatory technology continues to grow.
The new division has seen the appointment of four additional executives, all of whom possess a background in legislation. Among them are current executive deputy superintendent Matthew Homer, who most recently served with Plaid, a fintech startup.
Olivia Bumgardner, present director of research, will also take on the role of deputy superintendent. There’s also Matthew Siegel, an attorney in the antitrust division of the U.S. Department of Justice, and Andrew Lucas, the director for the Office of Financial Innovation.
Regulating Crypto Heads in a New Direction
This new division and these appointments position DFS as the regulator of the future, allowing the Department to better protect consumers, develop best practices, and analyze market data to strengthen New York’s standing as the center of financial innovation.