NYDFS Superintendent Adrienne Harris. Photo: Lev Radin/Pacific Press/LightRocket via Getty Images
New York regulators are set to set the benchmark for crypto businesses in the US and around the world with its licensing regime that the crypto industry covets and hated for its accessibility.
State of play: Superintendent Adrienne Harris took the rod from the state Department of Financial Services in January 2022, and has since expanded the regulator’s unique oversight over digital assets.
- It also supervises banks and insurance companies.
- NYDFS is effectively “the only prudential regulator [with] authority specific to virtual assets in the country,” Harris said yesterday at the Chainalysis Links conference in New York.
The regulator distributed its first crypto enforcement actions this year to Coinbase And Robinhood Cryptobut it is his recent action in the banking sector that crypto proponents have questioned.
Driving the news: “The idea that taking ownership of Signature [Bank] was on crypto, or that it is Chokepoint 2.0 is really ridiculous,” Harris told attendees, rolling her eyes.
- The question to Signature was a “fashionable bank”.
- In this situation, “regulators working together have no choice but to ensure that depositors are protected,” she said.
- “If you look at our rules and guidance…they require strong banking partnerships with well-regulated banks. The idea that we don’t want those banks to exist just doesn’t make sense.”
Yes, but: The FDIC blocked potential buyers of Signature to conduct its crypto business.
Quick take: When New York’s BitLicense was implemented in 2015, it was hailed as one of the most expensive and scariest schemes for the industry in the city.
- Now, in the wake of major crypto disasters, it is touted as a saving grace.
- Be smart: with this, Harris doesn’t necessarily have to prove whether certain cryptos are commodities or securities, an arguably lower hurdle to regulating the industry compared to, say, the CFTC or the SEC.
What they say : “When you think about the ills that have run through the market – the crypto market in particular – the rules that we have, I think, were pretty prophetic, ensuring that most of that fate doesn’t befall our licensees. “Harris said.
- Background: FTX.US in May 2022 applied for a state trust chartermonths before the international site FTX.com collapsed.
The other side: It’s no secret that the BitLicense process has been slow, which Harris doesn’t deny.
- “Speed is the wrong measure,” she said. “It’s proven by the fact that we didn’t get a license, right? FTX, and now many other infamous names.”
The big picture: Illinois and California are not the only ones to consider New York as an example.
- Harris has shared crypto regulatory best practices with people outside the United States and plans to visit the United Arab Emirates as well as Western Europe in the coming weeks.
- People tell her, “We know that if a company meets New York’s standards, it will meet ours,” she said.
What we are looking at: Harris seems to want to tighten the screws on crypto regulation, with what she calls: “real-time oversight.”
The bottom line: “This idea that regulators should only come in once a year, look at books and interview staff…maybe suited the 20th century financial system, but it certainly didn’t fit the 21st century,” she said. .