Ben Lawsky: Friend or Foe?

We take an in-depth look at Benjamin Lawsky, the man and his record, to predict his future regulation.

AccessTimeIconFeb 18, 2014 at 7:22 p.m. UTC
Updated Feb 9, 2023 at 1:24 p.m. UTC
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It would be generous to say that Benjamin Lawsky, superintendent of the New York Department of Financial Services (NYDFS), is viewed by the bitcoin community with some skepticism.

The man who has championed ‘BitLicenses’ – bitcoin-specific versions of money transmitter licenses for New York State – has developed a reputation within the fledgling industry as someone who is, at best, ‘not bad’.

Yet, for a regulator navigating the waters of an industry with libertarian and anarcho-capitalist zealots at its core, that borders on near god-like status.

While there are still many who dismiss his authority and believe that conciliatory conversations with regulators go against the very vision of Satoshi Nakamoto’s bitcoin, others seem hopeful that he will be a bitcoin ally, while most seem to have at least suspended their judgments of the superintendent.

— BitcoinBreak (@BitcoinBreak) January 28, 2014

Lawsky has earned that respect through his measured words and cautious actions towards bitcoin to date, and many are rooting for him to ultimately take a light-handed approach towards regulation of the cryptocurrency. Indeed, there is reason for cautious optimism.

A brief look at Ben Lawsky's background paints a fairly clear picture: He is no enemy.

Idealist and populist

Ben Lawsky comes across as both level-headed everyman and optimistic populist, both in person and on paper. He has tweeted pictures of beer and lasagna, references to his hometown sports teams, the Knicks and the Yankees, and even one gem, in which he said it was ok to watch Love Actually 25 times.

— Ben Lawsky (@BenLawsky) February 18, 2014

He promoted an informal atmosphere at the recent BitLicense hearings in New York, and at a recent event in Washington, DC, he joked about dogecoin, an alt-currency unfamiliar to most people outside of the bitcoin fraternity. I have personally had brief, but pleasant, conversations with him.

He is, by all accounts, a good guy.

Lawsky is also a career public servant. He started his career as a trial attorney for the Department of Justice and was quickly promoted to Chief Counsel to New York Senator Chuck Schumer, a member of the Senate Judiciary Committee.

Then, after a five-year stint as a New York City prosecutor, he joined forces with Andrew Cuomo, where he became Special Assistant to the then-Attorney General, and later, Chief of Staff to the new Governor of New York during his campaign and early term.

For those unfamiliar with New York politics, Schumer and Cuomo are populist Democrats, and it is safe to say that the broader banking industry doesn’t exactly love them. Still, Lawsky has said publicly that he strives to live up to the “model that Andrew Cuomo set”.

No Wall Street crony

Lawsky is by no means an impotent state regulator. The NYDFS is a recent construct – a 2011 combination of the New York State Banking and Insurance Departments. As superintendent, Lawsky supervises all New York-based insurance companies, chartered banks and mortgage providers, who collectively manage over $6tn in assets.

Governor Cuomo hand-picked Lawsky as the first superintendent of the NYDFS, and charged him with modernizing the financial regulator and using his clout to protect consumers and squelch white collar criminal activities at some of New York’s biggest financial institutions.

Lawksy has embraced the role, posting a solid record that includes a $340m settlement with Standard Chartered and Deloitte, related to money laundering operations with Iran. And he has not shied away from investigations into hot-button areas, like payday loans, mortgage services and public pension solicitations.

That bold approach has won him respect, but also resentment from other federal regulators, according to an in-depth piece on Lawsky by Village Voice contributor Anna Merlan.

Michael Greenberger, a former regulator with the federal Commodity Futures Trading Commission, claimed that Lawsky was “making the federal government look like they don’t know what they’re doing”. While Art Wilmarth, a law professor and regulatory expert at George Washington University, suggested that Lawsky’s best efforts could embarrass his federal colleagues to the extent that they would be forced to “fall in line”.

Indeed, Lawsky's department levied a $250m fine on the Bank of Tokyo-Mitsubishi for money laundering just months after the Treasury Department had extracted a paltry $8.5m settlement in its own case.

Ben Lawsky is a state regulator making national news. He has all the markings of a man with much larger political ambitions.

Political animal

For a political figure, Lawsky’s 17-year resume reads like one out of central casting. Neither he nor his wife, Jessica Roth, have spent much time cashing in their law degrees from Columbia (where he graduated cum laude), or Harvard (where she graduated magna cum laude). Instead, both have been public prosecutors and public-sector employees since they graduated, forgoing the high-paying private sector jobs that were surely available to them.

For most career political figures like Lawsky, relatively meager salaries are a small price to pay in order to move up the executive ranks. However, the pay cut only makes sense if his political capital is rising.


Lawsky has firmly established himself as a fearless regulator willing to confront much larger institutions with or without the help and blessing of the federal government. While that sheriff mentality is usually helpful for politicians, it also serves to reinforce voters’ ‘big government’ image when it comes to regulators.

More than anything, it strikes me that Lawsky could really use a good story about job creation, innovation and systematic consumer empowerment in an era of ‘too-big-to-fail’ banking monoliths. And that’s where bitcoin comes in.

Much to gain

The virtual-currency industry presents Lawsky with a rare chance to promote rather than restrict, and to create rather than destroy. Bitcoin is Lawsky’s political trump card.

While he stands to win little by attaching his name to BitLicense regulations that push innovations offshore, a light touch could allow him to one day take credit for fostering a potential multitrillion-dollar industry.

Lawsky has recognized bitcoin’s ability to reduce remittance costs for multinational families, and its potential to attract droves of new startups building bitcoin exchanges, investment platforms and myriad other financial technologies to the US and, in particular, New York City.

He has gone out of his way to engage the bitcoin community, calling for ‘open source’ regulation and solicited feedback from Twitter, the blogosphere and in the coming days, it appears, the vocal reddit community.

Even amidst last week’s tumult with Mt. Gox and the widespread transaction malleability attack, Lawsky was characteristically reserved. He avoided criticism of both bitcoin, the Bitcoin Protocol and the compromised exchanges, and instead suggested this was evidence that it was important to bring exchanges to New York so “we could get better insight into what exactly they’re doing”.

Lawsky caught flak during the BitLicense hearings for supposedly prioritizing money laundering restrictions over promotion of new economic development with bitcoin, but the caricatures of his willingness to squelch “1,000 flowers” in order to completely eliminate narco-trafficking were simply not true.

Instead, mere blocks away from the World Trade Center, Lawsky was talking about squelching the funding of terrorism and rogue nations:

The choice for the regulators is: permit money laundering on the one hand, or permit innovation on the other, and we’re always going to choose squelching the money laundering first. It’s not worth it to society to allow money laundering and all of the things it facilitates to persist in order to permit 1000 flowers to bloom on the innovation side.”

In the proper context, Lawksy sounds neither shrill nor unreasonable. He is right to be cautious when it comes to weeding out the good actors from the bad within bitcoin, as it is the only way that the currency and maybe even the technology stands a chance.

He knows that there are local ramifications to his department’s ultimate regulations, but more importantly, he knows that BitLicenses will set the standard nationally when it comes to reforming our antiquated money transmitter laws.

Look at Ben Lawsky’s background. Look at his potential as a political figure. Then, look at his opportunity with Bitcoin. Does it seem reasonable that he would burn his golden ticket?

Ryan Galt is a blogger, entrepreneur and freelance opinion writer for CoinDesk. His opinions do not necessarily reflect those of CoinDesk. You may email him at, or follow him on twitter @twobitidiot.


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