Regulators in New York eye further crypto guidance

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The head of the New York State Department of Financial Services said she wants the regulator to continue to be a leader in cryptocurrencies, remaining upbeat on virtual assets despite theindustrys turmoil.

The regulator has issued more cryptocurrency-related licenses so far in 2022 than it did in all of 2021, its superintendent, Adrienne Harris, said 29 June at a New York conference hosted by the Association of Certified Anti-Money Laundering Specialists, or ACAMS.

You will continue to see leadership from DFS in virtual currency, Harris said, adding that the regulator intended to advise the financial sector on nonfungible tokens, or NFTs. These digital tokens are units of data stored on a blockchain a database of transactions organized without the need for a central trusted authority and are often associated with digital art and collectibles and purchased with cryptocurrencies.

Harriss enthusiasm about digital assets comes as their values ​​have declined steeply, along with the fortunes of the companies serving the upstart market.

In her remarks, Harris pointed to a recent study that showed New York-based companies attracted 46% of investment in the crypto industry. She said that the DFS has not sacrificed regulatory rigor as it has welcomed new virtual-currency companies.

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The DFS this month releasedguidance on the issuance of US dollar-backed stablecoins, a move it said was a first for a financial regulator. Stablecoins value is tied to another asset, such as the US dollar or gold, to stabilize its price. The recentcollapse of stablecoin TerraUSDfrom its $1 level hasexacerbated regulators concernsthat other dollar-pegged assets could fall.

She said that she does not believe in what is known as regulation by enforcement a law-enforcement approach in which ground rules are made apparent by enforcement actions.

We should have transparency about what the rules of the road are, Harris said.

Harris, a former White House staffer and senior adviser with the US Treasury Department, was confirmed in January as superintendent of DFS. The state regulator, because of its jurisdiction over Wall Street, often plays a role in enforcement actions and regulations that can have national and international impact.

The comments from Harris contrast with the views of New York states top law enforcer, attorney general Letitia James, who has repeatedly advised investors that cryptocurrencies are an unwise investment that pose dangerous risks.

Write to Richard Vanderford [email protected]

This article was published by Dow Jones Newswires, a fellow Dow Jones Group Service

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