Regulators Not Afraid to Take Action Against Crypto Rule Breakers, NYDFS Chief Says

The regulator has brought enforcement actions against Coinbase and Robinhood.

AccessTimeIconDec 5, 2023 at 12:58 p.m. UTC
Updated Mar 8, 2024 at 6:14 p.m. UTC
  • The New York State Department of Financial Services isn't afraid to bring enforcement action against crypto companies that don't comply with its rules, Superintendent Adrienne Harris said at a Financial Times conference on Tuesday.
  • Other regulators and advisers are encouraging a bespoke and global approach to crypto.

The New York State Department of Financial Services (NYDFS) is not afraid to bring enforcement actions against crypto companies that do not follow its rules, Superintendent Adrienne Harris said at a Financial Times event on Tuesday.

The regulator has taken action against some of the biggest names in crypto. In January, the Coinbase (COIN) exchange had to pay a $50 million fine to settle NYDFS charges that it allowed users to set up accounts without conducting sufficient background checks. Last year, trading platform Robinhood (HOOD) was fined $30 million for allegedly violating anti-money laundering and cybersecurity regulations.

"So we've really spent a lot of time doing what I call when I first came into office, a tone reset, to say you are regulated, here are the expectations, here are the rules, and when you don't follow them, we will bring enforcement actions," said Harris.

Crypto exchange Binance recently reached a record-setting deal with U.S. regulators to settle charges that it served U.S. customers without the right approvals and allowed citizens to process transactions with customers in sanctioned regions.

"We've been talking about the illicit finance component of cryptocurrencies. I think that's going to continue and attention on that is going to be heightened as a result of Binance and some of the other cases that have been brought by DOJ and other authorities around the world," Harris said, referring to the U.S. Department of Justice.

Across the globe, regulators have been working out how best to oversee the crypto sector, and the European Union has put into law the Markets in Crypto Assets regulation – a broad set of rules for the digital asset industry that can apply across its 27 members, something some worry legitimizes crypto.

"Well, there isn't actually anything illegitimate about crypto. It is just a technology. It is a way to keep records. Rather than in a centralized entity, they have a shared ledger, so there is nothing illegitimate about it," Peter Kerstens, an adviser at the European Commission, said during the same panel. "You can do an awful lot of illegitimate things with that technology, and we'll try to moderate and regulate for that."

U.K. Parliamentarian Lisa Cameron, who sat on the same panel, asked for global standards for crypto to be put in place.

"I think there has to be that sort of level of interoperability, as they say, and this kind of baseline of standards and then other jurisdictions will place other sort of aspects on top of that, but I think that's something that we all need to really work towards," Cameron said.

International standard setters like the Financial Stability Board and the International Organization of Securities Commissions have issued global standards for countries to apply.

Edited by Sandali Handagama.


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Camomile Shumba

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.