New York Governor Proposes Giving Financial Watchdog More Teeth

Andrew Cuomo wants to give the Department of Financial Services more powers in regulating certain licensed entities, including crypto startups.

Jan 9, 2020 at 9:00 a.m. UTC
Updated Sep 13, 2021 at 12:07 p.m. UTC

New York Governor Andrew Cuomo wants to give the Department of Financial Services (NYDFS) more powers in regulating certain licensed entities, including cryptocurrency startups.

Cuomo presented his 2020 "State of the State" report on Wednesday, a 321-page list of proposals including a new look at exemptions that currently exist for certain consumer financial products and services.

While NYDFS, the creator of the notoriously hard to acquire "BitLicense," can already bring enforcement actions against unlicensed entities, some companies can claim they are not subject to the regulator because they do not directly sell their products to consumers.

Further, insurance and banking laws grant NYDFS the authority to collect costs for assessments but companies operating under the Financial Services Law are not explicitly required to pay up.

"Entities licensed under the FSL (e.g. virtual currency entities) are not required to pay such assessments, despite being subject to similar examination and oversight requirements," the document reads.

Cuomo wants to amend the law to close these loopholes, according to the report.

NYDFS has regulated cryptocurrency startups under its virtual currency license since mid-2014. Superintendent Linda Lacewell announced in October the agency was reviewing the regime, citing the crypto industry's evolution since the BitLicense was proposed.

Changes to be considered include a modification to the approval process for listing cryptocurrencies and a model framework for coin listings that exchanges can use. NYDFS is accepting public comment through Jan. 27.

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