New York financial regulators launch new innovation division to regulate, license cryptocurrency businesses

The New York State Department of Financial Services (NYDFS) has launched a new division that will be responsible for regulating and licensing crypto-related businesses.

As per a press release, the new Research and Innovation Division will “house the Department’s division responsible for licensing and supervising virtual currencies, and it will assess new efforts to use technology to address financial exclusion.”

New York’s financial regulator requires a business that issue and trade digital assets to obtain a special kind of registration called BitLicense. This is to ensure that these entities follow certain standards, especially with regard to disclosure and consumer data protection.

The announcement also included the division’s four new executives, all with backgrounds in government work.

Matthew Homer, who previously served as the Head of Policy and Research of startup Quovo, will take spearhead the new in-house team.

Matthew Siegel and Olivia Bumgardner will both assume the role of deputy superintendents. Siegel used to work as a trial attorney in the Antitrust Division of the U.S. Department of Justice, whereas Bumgardner is currently NYDFS’ Director of Research.

Lastly, Andrew Lucas, the Director of Financial Innovation, will serve as counsel.

“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,” Financial Services Superintendent Linda A. Lacewell said.

A BitLicense is a business license of virtual currency activities issued by the NYDFS under regulations created for companies. The regulations are limited to activities involving the state of New York. As per CoinDesk, only 20 BitLicenses have been granted to cryptocurrency firms. so far

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. The latter also received a money transmitter license.

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.