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 the industry’s 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 Wednesday 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,” Ms. 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.
Ms. Harris’s 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, Ms. 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 hasn’t sacrificed “regulatory rigor” as it has welcomed new virtual-currency companies.
The DFS this month released guidance on the issuance of U.S. dollar-backed stablecoins, a move it said was a first for a financial regulator. Stablecoins’ value is tied to another asset, such as the U.S. dollar or gold, to stabilize its price. The recent collapse of stablecoin TerraUSD from its $1 level has exacerbated regulators’ concerns that other dollar-pegged assets could fall.
She said that she doesn’t believe in what’s 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,” Ms. Harris said.
Ms. Harris, a former White House staffer and senior adviser with the U.S. 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 Ms. Harris contrast with the views of New York state’s 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 at [email protected]
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Appeared in the June 30, 2022, print edition as ‘New York Regulator Plans to Issue More Guidance on Digital Assets.’