The three-year veteran of the NYDFS was involved in the formation of the New York BitLicense, the controversial licensing regime for digital currency businesses seeking to serve consumers in the US state, before departing in February. The move is perhaps surprising given the originally skeptical outlook on the technology Alter voiced at the New York BitLicense hearings in early 2014.
At the two-day event, Alter was perhaps the most outspoken of NYDFS representatives on the potential downsides of digital currency regulation, arguing that the state’s money laundering obligations should take priority over innovation and that the decentralized payment network’s mining community represented a “systemic threat” to its operations.
In interview, Alter indicated that his opinion on the technology has since evolved as he became “incredibly fascinated” with developments in the field. Today, he finds that bitcoin and the blockchain could offer solutions for the very challenges it seemed to initially pose.
Alter told CoinDesk:
“At NYDFS, I had a special focus on anti-money laundering and economic sanctions enforcement. I thought [blockchain technology] had incredible applications and if it grows and is adopted more broadly could … reduce regulatory costs. There’s substantial time and effort that goes into compliance and this may provide an important answer to that problem.”
Alter framed his interest in a position at itBit as an extension of his interests in compliance and regulation.
“Over the months it came to pass I had this opportunity with itbit and thought this was a tremendous opportunity to pursue that,” he said.
As for any potential conflict of interest from the appointment, Alter stated his position that he did not participate in the granting of itBit’s New York banking charter. The approval, secured at the time of the company’s $25m Series A in May, grants itBit the ability to serve customers in 50 US states and to hold customer deposits.
The comments position Alter in contrast to former NYDFS superintendent Ben Lawsky, who has previously indicated that he is unable to work with bitcoin industry firms as a private consultant.
“I had no discussions about ever going to work with itBit, that didn’t come up until months after I left NYDFS,” Alter said. “My ethical requirements are defined by NY state law, and I’m sure there isn’t the conflict of interest for me that a superintendent would encounter.”
Alter’s appointment coincides with the hiring of CFO Kim Petry, who formerly served as CFO and vice president of global commercial and corporate card payment at American Express.
In regards to his new role at itBit, Alter indicated that he would play an “active role” in working with regulators as they seek to inform their positions on the technology.
“I understand the benefits of the platform and can accommodate their concerns, adjusting the business and the message of doing business in a way that will give regulators security that it is being done right,” he continued.
Alter suggested that within the next three to six months he will be working with itBit to develop strategic relationships with investors, while also attending to the company’s compliance efforts.
He further suggested that he would be uniquely suited toward helping others understand the potential of blockchain technology in financial transactions and settlement, while dissuading concerns similar to his own after first learning of the technology.
“Coming from where I come from, I have a sense of what those concerns are.”
At press time, the NYDFS had not responded to requests for comment.
New York image via Shutterstock