NYDFS Chief Says Regulators Need to Develop a ‘21st Century Framework’ for Crypto

NYDFS Superintendent Adrienne Harris says the regulatory agency will triple the size of its virtual currency unit by the end of the year
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New York’s top financial regulator believes the current approach to digital asset regulation – both at the state and federal level – is due for an update.

At a Chainalysis conference on Thursday, New York State Department of Financial Services (NYDFS) Superintendent Adrienne Harris said her agency is working to hire additional staff and update its guidance to better deal with the challenges of regulating the ever-changing crypto industry.

“Virtual assets are the first type of assets we’ve seen that are shape shifting,” Harris said. “As we watch federal regulators engage in the space, [crypto] doesn’t necessarily fit neatly into the commodities bucket or the securities bucket or the currency bucket.”

“So how do you tackle a digital asset whose definition changes based on use case? I think that’s going to require regulators to have a more 21st century framework for thinking about these things,” Harris added.

To do business in New York, crypto companies must be regulated by NYDFS, which also oversees banks and other traditional financial institutions. The agency’s regulatory standards are some of the strictest in the country, and many in the industry have criticized the agency for placing burdensome requirements on crypto startups that they say discourages businesses from setting up shop in the Empire State.