New NYDFS department to supervise crypto startups licensing

July 24, 2019, | AtoZ MarketsThe New York State Department of Financial Services (NYDFS) has created a new Research and Innovation Division that will manage the licensing of cryptocurrency-related startups companies.

Yesterday, superintendent Linda Lacewell has announced the research and innovation division at the department of financial services will track emerging financial technologies. The new wing is going to take the responsibility for licensing and supervising virtual currencies.   

He also stated that: “The financial services regulatory landscape needs to evolve and adapt as innovation in banking, insurance, and regulatory technology continues to grow.” 

Four new executives included in the team 

New York’s financial regulator requires a business that will issue and trade crypto-related assets to obtain a special kind of registration which is called as BitLicense. Also, this is to make sure that these entities follow certain standards. The major concern will be regarding disclosure and consumer data protection.

According to the announcement the division includes four new executives from different backgrounds in government work.

Matthew Homer who was previously served as the Head of Policy and Research of startup Quovo will take the position as the spearhead of the new in-house team. In addition to this, Matthew Siegel and Olivia Bumgardner will be in the role of deputy superintendents. And, Andrew Lucas who is the Director of Financial Innovation will serve as a counsel.

Linda added: “The new division and these appointments position DFS as the regulator of the future, allowing the Department to better protect consumers, develop best practices, and analyze market data to strengthen New York’s standing as the center of financial innovation.”

NYDFS to provide crypto custodial services

BitLicense comes under a business license of digital currency activities which were issued by the NYDFS under regulations created for companies. These regulations are limited to activities which involve the state of New York. As per various online sources, only 20 nos BitLicenses have been granted to cryptocurrency firms till date.

The most recent one to receive is the two subsidiaries of Chicago-based cryptocurrency exchange Seed CX. The Seed Digital Commodities Market LLC and Zero Hash LLC were both awarded with virtual currency licenses.

Meanwhile, Fidelity Digital Assets is reportedly applying for a trust license at the NYDFS to allow the company to provide crypto custodial services in the state and operate as a Limited Purpose Trust Company. Even Facebook is allegedly eyeing for a cryptocurrency business license in the Empire State to use its controversial cryptocurrency Libra coin.

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