NYDFS Establishes Crypto Licensing Department

Cryptocurrencies have enjoyed substantial attention over the last few weeks as regulators and various other authorities across the world are making efforts to regulate digital assets. The crypto industry is fast growing and many authorities recognize this growth.

The New York Department of Financial Services (NYDFS) has become one of the latest regulatory bodies to make a move towards regulating the crypto industry. The financial regulator has announced that they have established a new department which deals with crypto related matters. Among the tasks the new department will be handling is the licensing and regulation of crypto related businesses.

Through a statement issued on the 23rd of July, the NYDFS revealed the Research and Innovation Division. This division will be home to a team dedicated to licensing and managing crypto activity in the state. The department will also be looking at various new ways in which blockchain technology and virtual assets can be used to address financial challenges in the state.

Under the jurisdiction of the NYDFS, businesses that engage in the trade and issuance of cryptocurrencies should be equipped with a license called BitLicense. According to the regulations under which the license is issued, the businesses have to maintain certain standards pertaining to disclosure and the privacy of consumer data. These required standards are being viewed by some in the crypto space as restrictive to the general progress of a crypto business.

Crypto businesses may have already started applying for licensing from the NYDFS. According to reports earlier this week, Fidelity Digital Assets Services (FDAS) applied for a license to operate as a trust in New York. FDAS, Fidelity’s crypto wing, intends to provide custodial services for cryptocurrency in the state.

The licensing of crypto related businesses in New York is likely to boost online crypto trading in the state as more people will be able to legally engage with digital assets. The newly established division will provide more options through which people can buy cryptocurrencies in the state.

Department Appointments

Accompanying the announcement of the establishment of the division is a list of appointments that have been made to the division. Matthew Homer, former head of policy and research at a fintech firm called Quovo, will head the Research and Innovation Division. The new head has also previously worked at the Federal Deposit Insurance Corporation and the United States Agency for International Development.

Under Homer, the team will have two deputy superintendents namely Matthew Siegel and Olivia Bumgardner. Bumgardner is currently serving as the director of research at the NYDFS. Prior to this, he has led a number of projects that are related to digital currencies, cybersecurity and financial inclusion.

Siegel has previously worked as a trial attorney in the Antitrust Division of the U.S Department of Justice. He has also been an Assistant Attorney General in the Antitrust Bureau of the New York State Office of the Attorney General. Counsel to the Research and Innovation Division will be Andrew Lucas, former senior counsel at the New York City Law Department.