{"id":128390,"date":"2025-05-01T16:21:47","date_gmt":"2025-05-01T16:21:47","guid":{"rendered":"http:\/\/cryptospotters.net\/?p=128390"},"modified":"2025-05-01T16:21:47","modified_gmt":"2025-05-01T16:21:47","slug":"federal-crypto-legislation-could-come-with-a-new-york-state-of-mind","status":"publish","type":"post","link":"http:\/\/cryptospotters.net\/?p=128390","title":{"rendered":"Federal crypto legislation could come with a \u2018New York State of Mind\u2019"},"content":{"rendered":"

Source: Cointelegraph.com NewsLove it or leave it, New York State has been a force in crypto regulation.
\nTen years ago, the state created the United States\u2019 first comprehensive regulatory framework for firms dealing in cryptocurrencies, including key consumer protection, anti-money laundering compliance and cybersecurity guidelines.
\nIn September 2015, the New York Department of Financial Services (NYDFS) issued its first BitLicense to Circle Internet Financial, enabling the company to conduct digital currency business activity in the state. Ripple Markets received the second BitLicense in 2016. Circle and Ripple went on to become giant players in the global cryptocurrency and stablecoin industry.
\nToday, the NYDFS regulates one of the largest pools of crypto firms in the world, and it is often cited as the gold standard for crypto regulation in the US.
\nIt\u2019s against that background that Ken Coghill, NYDFS\u2019s deputy superintendent for virtual currencies, appeared at Cornell Tech\u2019s blockchain conference on April 25 to discuss \u201cA New Era of U.S. Innovation in Crypto.\u201d\u00a0
\n\u201cWe set the guardrails\u201d
\nMost of the firms that have come to the NYDFS for a BitLicense are crypto-native firms, and often, they are new to the financial world and not used to dealing with regulators. Many times they don\u2019t fully understand that they are in control of someone else\u2019s asset, noted Coghill at the New York City conference, adding:
\nIf you want to start a business and the only person you\u2019re putting at risk is your own business, that\u2019s not really our concern. We only exist because you\u2019re selling something to somebody else, and you\u2019re maintaining control over that product for someone else.
\n\u201cWe set the guardrails,\u201d Coghill said, and it\u2019s the industry\u2019s job to figure out how to stay within those guardrails. The NYDFS can\u2019t possibly contemplate every element that\u2019s going to go wrong in a business.
\nThese days, more conventional financial institutions are becoming interested in crypto as well, added Coghill. Large banks are beginning to offer crypto custody services, and others are starting to provide settlement services. \u201cThe conventional [bank] model is being brought into the crypto [sphere] primarily because it makes people feel comfortable,\u201d said Coghill.
\nRelated: Trump\u2019s first 100 days \u2018worst in history\u2019 despite crypto promises
\nAnd while the NYDFS has only issued 22 BitLicenses to date, it appears to be ready to handle a tide of applications from TradFi firms if and when they materialize. \u201cOn a per capita basis, we have more supervisory resources focused on crypto businesses than we do for all of those other [non-crypto] businesses,\u201d said Coghill. This includes 3,000 banks, insurance companies and other financial institutions.\u00a0
\nDubai\u2019s crypto regulator
\nIt wasn\u2019t a direct route that brought Coghill to the NYDFS in July 2024. He spent the previous 12 years in the Middle East working for the Dubai Financial Services Authority, eventually becoming the agency\u2019s head of innovation and technology risk supervision.
\nIt was a \u201cwhim\u201d that took him to the Middle East in the first place, he recalled. \u201cI went for three years and stayed for 12 years,\u201d spending that time primarily as an official regulating global systemically important banks, or G-SIBs. There, he was called upon to develop a cryptocurrency supervision model, and so he \u201cspent the last six years regulating cryptocurrency in the Middle East.\u201d
\nThe Dubai Financial Services Authority offices. Source: Cond\u00e9 NastEventually, an opportunity arose to return to the US, where he had worked earlier as a manager in the department of market regulation at the Chicago Board Options Exchange. Before that he was an options trader. He took the new assignment with the NYDFS, among other reasons, because \u201cthe world looks to New York, and the world looks to the DFS\u201d when it comes to regulation, he told the Cornell Tech audience.
\nPanel moderator Neil DeSilva asked Coghill what good regulation looks like. \u201cGood regulation is regulation that doesn\u2019t prohibit activity but that applies appropriate guardrails that reduces risk to clients,\u201d he answered. One can\u2019t eliminate risk entirely; to do so would quash all business activity.
\nRelated: Institutions break up with Ethereum but keep ETH on the hook
\nHe compares regulation to a pendulum constantly swinging between two extremes: too lenient and too restrictive. \u201cThe pendulum swung too far to one end of the regulation in the last few years [i.e., too restrictive]. Now it\u2019s swinging back.\u201d
\nWhat does the state regulator make of the fevered regulatory activity in Washington, DC at the federal level these days? There seem to be some \u201cpositive tailwinds\u201d behind cryptocurrencies and stablecoins, noted DeSilva, himself a former chief financial officer for PayPal\u2019s Digital Currencies and Remittances business.\u00a0
\nA pipeline to Washington
\n\u201cFor DFS, it\u2019s largely business as usual,\u201d Coghill commented. That\u2019s because New York State has long had crypto rules in place. In fact, \u201cmuch of what\u2019s happening now in Washington\u201d \u2014 at the federal level \u2014 \u201cis influenced by what we\u2019ve done over the last 10 years\u201d at the state level.
\nThe state agency has regularly communicated with the powers-that-be in the US capital regarding digital currencies. \u201cWe have a team that practically sits in Washington and has discussions with Congressional members, talking about what we think will work and what won\u2019t work.\u201d
\nThe NYDFS\u2019 crypto initiatives have influenced other US states. California\u2019s crypto reform legislation (AB 1934), signed into law in late September 2024, for instance, builds on New York State\u2019s BitLicense and its limited-purpose trust charter regulations for digital currency businesses \u2014 even though BitLicense\u2019s licensing requirements are relatively strict.
\nNot all in the crypto industry have been enamored with the state\u2019s crypto licensing regime, either, declaring BitLicenses too expensive. Its application fee is $5,000 \u2014 too strict with its detailed anti-money laundering protocols and required audits and generally too much of an obstacle for innovative crypto-native firms. Crypto exchange Kraken exited the state when New York implemented its BitLicense requirement, for instance.\u00a0
\nCoghill was asked by DeSilva how the NYDFS actually looks at decentralized protocols compared with how it views the centralized financial institutions that it has historically regulated.\u00a0
\nIt\u2019s important to look at the actual purpose of the product, Coghill answered. What\u2019s its underlying intent? Who does it serve, and what are its good and bad impacts? \u201cThere are lots of innovations that are created for no purpose other than making a lot of money off of its customers,\u201d said Coghill. \u201cAnd so it\u2019s incumbent on us to filter those out.\u201d\u00a0
\n\u201cWe\u2019re paid to look at everything in a dark, dark way. It\u2019s not our job to look at and say, \u2018Yes, this is fantastic.\u2019\u201d Rather, they examine a potential product and ask, \u201cHow is this bad for efficiency?\u201d or \u201cHow is this bad for inclusion?\u201d\u00a0
\nHow does he think things will play out at the federal level this year regarding crypto and stablecoin legislation?
\nWhat\u2019s going to ultimately happen [in Washington, DC]? Who knows? We could know six months from now. We could know things next week. Things have been changing very rapidly recently.
\nIn the meantime, \u201cwe\u2019re still accepting applications. We\u2019re still processing those applications. We\u2019re still focusing on our underlying objectives: protecting the market, protecting the consumers, supporting innovation.\u201d
\nMagazine: Crypto wanted to overthrow banks, now it\u2019s becoming them in stablecoin fightRead More<\/a><\/p>","protected":false},"excerpt":{"rendered":"

Source: Cointelegraph.com NewsLove it or leave it, New York State has been a force in crypto regulation. Ten years ago, the state created the United States\u2019 first comprehensive regulatory framework… <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[],"_links":{"self":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/128390"}],"collection":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=128390"}],"version-history":[{"count":0,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/128390\/revisions"}],"wp:attachment":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=128390"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=128390"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=128390"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}