NY Regulator Argues BitLicense Regulation Boosted Businesses

Maria Vullo highlighted the state's early involvement in cryptocurrency. But many think New York's BitLicense desperately needs an overhaul.

AccessTimeIconApr 12, 2018 at 4:30 p.m. UTC
Updated May 9, 2023 at 3:03 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

The New York State Department of Financial Services (NYDFS) is taking steps to defend its much-contested track record as an early regulator of cryptocurrency.

In remarks at this year's Conference of State Bank Supervisors spring meeting Tuesday, NYDFS superintendent Maria Vullo discussed the agency's efforts to police the cryptocurrency space, touting the state's technology-specific licensing regime, the BitLicense, as an example of how her agency has contributed to the maturation of the industry.

  • SEC's Crypto Enforcement Actions in 2023
    SEC's Crypto Enforcement Actions in 2023
  • How Much Money Are Terrorists Actually Raising in Crypto?
    How Much Money Are Terrorists Actually Raising in Crypto?
  • Cost of Not Enacting Crypto Regulation Is 'Extremely High,' Legal Expert Says
    Cost of Not Enacting Crypto Regulation Is 'Extremely High,' Legal Expert Says
  • Ripple Exec Says Singapore Is a 'Significant Hub for Our Business'
    Ripple Exec Says Singapore Is a 'Significant Hub for Our Business'
  • Because the agency's role is to protect consumers, cryptocurrencies needed to be regulated, and these regulations, she argued, have benefited the space.

    She told attendees:

    "The regulatory structure that we created for virtual currency has helped our licensed companies attract greater interest from customers, investors, and potential financial services partners seeking to pursue further innovation, while protecting market integrity by stringent standards applicable to all law-abiding business enterprises."

    Vullo said her agency held public hearings in early 2014, before she took over the top job, as "the problems at Mt. Gox - then handling 70 percent of Bitcoin exchanges - continued to spiral out of control." The regulator drafted rules governing virtual currency businesses and finalized the BitLicense in 2015.

    The regulation helped "insure that the competition among new entrants is not a race to the bottom." She again cited the example of Mt. Gox, where "fatal flaws" caused investors to lose hundreds of millions of dollars worth of bitcoin - now billions, due to the higher exchange rate.

    Vullo emphasized the agency's focus on consumer welfare and industry compliance, saying:

    "DFS and the states have helped set the standards through our application and examination processes to ensure that customer protection is taken seriously, and cybersecurity and [anti-money laundering] standards are respected."

    Vullo did not address criticism of the BitLicense, which many in the industry see as imposing sweeping, onerous requirements. Only a handful of companies have obtained the license, and New York State assemblyman Ron Kim submitted a bill in February to replace the framework. The bill remains in committee.

    Kim told CoinDesk last month that "one person, the superintendent from one state government agency, has way too much power over the current regulations, without any oversight."

    The Department of Financial Services did not immediately respond to a request for comment.

    New York skyline image via Shutterstock.


    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.