Market decline

New York financial regulator bullish on crypto despite market decline

The head of the New York State Department of Financial Services said she wants the regulator to continue to be a leader in cryptocurrencies, remaining bullish on virtual assets despite industry turmoil.

The regulator has issued more cryptocurrency-related licenses so far in 2022 than in 2021, its superintendent, Adrienne Harris, said Wednesday at a conference in New York hosted by the Association of Certified Anti- Money Laundering Specialists, or ACAMS.

“You will continue to see DFS’s leadership in virtual currency,” Harris said, adding that the regulator intended to advise the financial industry on non-fungible tokens, or NFTs. These digital tokens are units of data stored on a blockchain – a database of transactions organized without the need for a central trusted authority – and are often associated with digital art and collectibles and purchased with crypto. -currencies.

Ms. Harris’ enthusiasm for digital assets stems from the fact that their values ​​have fallen sharply, along with the fortunes of companies serving the beginner market.

In her remarks, Ms. Harris pointed to a recent study which showed New York-based companies attracting 46% of investment in the crypto industry. She said the DFS did not sacrifice “regulatory rigor” as it welcomed new virtual currency companies.

The DFS published this month guidance on issuing US dollar-backed stablecoins, a move he said was a first for a financial regulator. The value of stablecoins is linked to another asset, such as the US dollar or gold, to stabilize its price. The recent collapse of the TerraUSD stablecoin from its $1 level has heightened concerns among regulators about the fall of other dollar-pegged assets.

She said she doesn’t believe in so-called “regulation by enforcement” – an enforcement approach in which ground rules are made apparent through enforcement action.

“We should have transparency about the rules of the road,” Ms Harris said.

Ms Harris, a former White House staffer and senior adviser to the US Treasury Department, was confirmed in January as DFS superintendent. The state regulator, because of its jurisdiction over Wall Street, often plays a role in enforcement actions and regulations that can have national and international impact.

Ms. Harris’ comments contrast with the views of New York State’s top law enforcement official, Attorney General Letitia James, who has repeatedly advised investors that cryptocurrencies are a reckless investment. which presents “dangerous risks”.

When cryptocurrency lending platform Celsius froze user accounts amid plunging valuations, it caused industry-wide repercussions and raised questions about what happens to users. user assets if a crypto platform files for bankruptcy. The WSJ’s Vicky Ge Huang explains. Photo illustration: Jordan Kranse

Write to Richard Vanderford at [email protected]

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