Adrienne Harris, the superintendent of the New York Department of Financial Services (NYDFS), has reiterated her unwavering commitment to regulating New York’s virtual currency space.
NYDFS’ relentless crypto regulatory efforts
Under Harris’s leadership, the NYDFS’s regulatory endeavors in the crypto sector have been pivotal. The department, with her at the helm, has executed a two-year transformative initiative to strengthen its oversight of virtual currencies.
This comprehensive effort includes crafting updated guidance for the adoption or listing of virtual currencies and establishing a framework to designate coins or tokens to the DFS greenlist.
Appointed as superintendent in August 2021 and confirmed by the State Senate in 2022, Harris had transformed a three-person crypto unit into a team larger than an NFL football roster. According to Axios, Harris revealed during a recent policy summit hosted by the Blockchain Association in D.C, that the agency’s crypto unit has grown to over 60 people.
It’s “the largest crypto unit probably anywhere in the world,” she said.
Despite receiving its fair share of criticism over the years, the agency claims its regulatory framework for virtual currencies aims to guarantee top-tier standards of safety, soundness, and consumer protection, all while nurturing responsible growth in the industry.
Harris has stressed the significance of this framework, underscoring the department’s collaboration with regulators worldwide to establish effective standards for the evolving virtual currency sector.
Harris has also expressed her commitment to further expanding the team, stating they are “marching down the field” to strengthen crypto regulation in the state.
The DFS has issued eight pieces of regulatory guidance, covering aspects like stablecoins, market manipulation, and blockchain analytics. Harris highlighted the importance of practical rules, differentiating between having rules on paper and rules that are operationally effective.
Additionally, the DFS recently modified coin listing rules, requiring firms under New York’s BitLicense regime to establish robust self-certification processes for listings.
This change eliminates the need for approval for each token listing and introduces a delisting requirement, influenced by experiences with Binance’s stablecoin BUSD.
Harris acknowledged the state’s proactive efforts in regulating the stablecoin, preceding actions taken by various regulatory agencies.
When addressing federal oversight of stablecoins and New York’s role, Harris emphasized her goal to be an impartial mediator, stating that DFS actions are non-partisan and not about taking sides.
Her statements showed the NYDFS’s substantial involvement in crypto regulation, which can be described as a transformative initiative to strengthen the department’s leading oversight in the nation’s virtual currency landscape.
Fostering investor protection
In November 2022, under Harris’ leadership, the NYDFS actively pursued the enhancement of crypto industry regulation by issuing digital asset guidance to state-regulated banks, specifying the information required before engaging in virtual currency-related activities.
This includes submitting a business plan detailing the proposed activity’s impact on capital, liquidity, and relevant consumer protection policies. Superintendent Harris stressed the critical role of these policies in safeguarding consumer funds and maintaining the competitiveness of New York-regulated banks in the crypto space.
In a separate move, the NYDFS introduced rules for licensed crypto firms issuing stablecoins, mandating reserve requirements and monthly independent audits. The goal is to ensure stablecoins are fully backed by reserves and redeemable by investors, with specific requirements outlined for these reserves.
The NYDFS also implemented rigorous new guidelines for the listing and delisting of cryptocurrencies, in a bid to bolster investor protection. Superintendent Harris emphasized the department’s commitment to adapting regulatory and operational capabilities to industry developments for consumer and market protection.
The updated guidelines mandate crypto companies to submit their coin listing and delisting policies for NYDFS approval, subject to more stringent risk assessment standards.
These changes apply to all digital currency business entities licensed under the New York Codes, Rules, and Regulation or limited purpose trust companies as per the state’s Banking Law.