In a recent turn of events, the New York Department of Financial Services (NYDFS) has proposed tightening regulations on digital coin listings, especially those targeting retail clients. The move is expected to bring with it increased scrutiny for licensees and a greater degree of risk assessment before any new coin is listed.
The guidelines, introduced by NYDFS Superintendent Adrienne Harris, would necessitate that licensees not only analyze the legal, market, and reputational hazards posed by a new coin but also define a process for delisting the token. As Harris elaborates, her tenure at DFS is focused on harmonizing the Department’s regulatory functionality with the industry’s fast-paced developments to protect both consumers and markets. She backs up her commitment with a team of over 60 staff members and more than $132 million in fines levied against cryptocurrency firms.
Bonded institutions, like Coinbase and Robinhood, have previously buckled under NYDFS sanctions. The regulator, in April, rolled out procedures that detailed how cryptocurrency companies would face examination for anti-money laundering measures and cybersecurity standards.
The NYDFS’s most recent action, executed in September, introduced an updated list of “greenlisted” coins. These currencies, including bitcoin, ether, and stablecoins issued by PayPal and Gemini, can now be listed or held in custody by licensees without facing additional regulatory hurdles.
Undeniably, New York has led the United States in regulatory exploration of the crypto sphere. However, response from the industry has been mixed. Some welcome this regulatory lucidity, appreciating the added assurance it brings to the market. However, others, like Kraken, have pulled out of the state in protest, viewing these strict measures as deterrent to innovation and growth.
This dichotomy inherently strengthens the regulatory quandary for digital assets. On one hand, mass adoption of cryptocurrencies calls for a degree of regulatory oversight to protect consumers and maintain market integrity. On the other hand, a heavy-handed approach may stifle the innovative potential that the digital currency market holds, curbing its exponential growth. As such, striking a diplomatic middle ground in this regulatory tug-of-war remains a task of paramount importance for policymakers.
Source: Coindesk
