New York continues to lead on state crypto regulations

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As we approach what will undoubtedly be a new era for federal crypto regulation, this state watchdog head has some advice for companies: Start engaging now. 

“Never surprise your regulator,” New York Department of Financial Services Superintendent Adrienne Harris said at the Blockchain Association Policy Summit earlier this month. 

“We are by nature risk-adverse people,” she added. “We don’t like to be surprised, so come in and talk to us proactively.” 

Waiting until there is already an enforcement action underway to meet with regulators is a mistake, Harris said. Companies should be having these conversations before they even file applications, she added. 

The comments come as New York continues to be a leader in state-level regulation. It was the first state to design a “BitLicense” program in 2014. The policy, which requires businesses conducting digital asset activities to register with the DFS, came into effect the following year. 

“Foreign jurisdictions and Congress have been for the last several years really borrowing from the New York framework as now it’s the gold standard,” Harris said. 

New York’s BitLicense may have been received poorly by the industry at first (at least 10 companies initially left the state when the regulations were announced), but the regulatory framework shows the DFS is committed to allowing investors to access the markets they want, Harris said. 

“It’s not our job as a regulator to decide what the market wants or doesn’t want, right? These instruments are here,” she added. “This technology is here. It’s our job to protect consumers, protect markets and ensure responsible growth in the industry.” 

While President-elect Donald Trump has not commented on whether he would grant more authority to states to oversee the crypto industry, his administration’s efforts to shrink the size of several federal agencies, including the SEC, could ultimately have that effect.

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