InfoBytes Blog
NYDFS calls its virtual currency framework the “gold standard”
On May 25, NYDFS Superintendent Adrienne Harris testified before the New York assembly to address the regulation of virtual currency in the state. Harris highlighted the value and “gold standard” set by NYDFS’s virtual currency regulatory framework. She detailed how novel risks in that landscape were met with subsequential growth of the virtual currency unit since her arrival, including the addition of 50 professionals and a range of seasoned experts to streamline enforcement investigations.
In her testimony, Harris also voiced how the framework responsibly supports innovation for entities engaging primarily in virtual currency activities, leveraging their licensing (BitLicense) and chartering (the limited purpose trust company charter) regimes, whereas other states license virtual currency entities only as money transmitters. Adding on, she specified how NYDFS’s customized approach continues after approval, specifically, “NYDFS creates a detailed supervisory agreement that is tailored to the specific risks presented by the company’s business model. Licensed and chartered entities also are subject to ongoing supervision and are regularly examined for compliance with broadly applicable virtual currency regulations and other rules, as well as with their supervisory agreements.” The development of these tools, among other safeguards, is demonstrative of NYDFS’ focus on addressing the inherently high-risk nature of virtual currency business activity with respect to illicit transactions, she noted.
Harris further clarified that secure, customized regulatory requirements, as outlined in the framework, coupled with transparency, ushers in more business for the state, especially in the case of crypto startups. Further, other regulators, jurisdictions, and economic development agencies are seeking to replicate the framework, Harris commented, as consumer protection is not only achieved as outlined in the law, but by regulators that are able to move at a faster pace than the former.