New York regulator sets up new division to regulate crypto businesses

Getting your Trinity Audio player ready...

The New York Department of Financial Services (NYDFS) has announced the launch of a new division which among other things, will license and regulate cryptocurrency businesses in the state. The NYDFS believes that the newly-created Research and Innovation Division will position it as the regulator of the future.

In a press release announcing the news, the financial services superintendent Linda Lacewell stated that the new division will cement New York as the global financial hub. With emerging technology reshaping the financial landscape all over the world, New York has to keep up or risk being left out. She commented:

The financial services regulatory landscape needs to evolve and adapt as innovation in banking, insurance and regulatory technology continues to grow. 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.

The division will keep track of the rapid changes in emerging technology, supporting internal transformation and market innovation in fintech, banking and insurance.

More crucially, the division will be charged with the regulation and supervision of cryptocurrencies. According to the press release, the division will, “assess new efforts to use technology to address financial exclusion; identify and protect consumer data rights; and encourage innovations in the financial services marketplace to preserve New York’s competitiveness as a financial innovation hub.”

The BitLicense is a coveted license that lets crypto companies offer their services and products in the state of New York. One of the latest companies to acquire the license is Seed CX, a crypto derivatives provider. It has also emerged that Calibra, the Facebook subsidiary in charge of its Libra crypto project, is in the process of applying for the license.

Not everyone has been as lucky with the BitLicense. Bittrex crypto exchange was denied the license in April, with the NYDFS claiming that the exchange didn’t meet the standards required to operate in the state.

Since it came into effect in 2014, just over 20 firms have received the licenses with Robinhood and LibertyX being some of the companies that have received it this year.

The new division will be led by Matthew Homer, a former head of research at Quovo, a New York fintech company.