New York Regulator Claiming Crypto ‘Lending Itself to Illegal Finance’
Adrienne Harris, NYDFS Superintendent, criticized crypto’s ‘secrecy component’ by claiming it facilitates an environment for malicious actors.
Adrienne Harris, New York State’s financial regulator, asserted that crypto’s ‘element of anonymity’ establishes an environment that promotes illegal finance. Currently, she is the Superintendent of the New York Department of Financial Services (NYDFS).
Crypto Context Suits Malicious Actors and Illicit Finance
Speaking on a panel at the Crypto Winter Summit, she claimed that crypto ‘is an environment suitable for illegal finance and malicious actors.’ She utilized the example of a ransom payment in cash to show that ‘a person must still turn up at the drop location.’
Further, she asserted that ‘this is not the case with digital currency despite it having the traceability component.’
Harris also revealed that for several years, ‘the cryptocurrency’s illegal finance element’ has remained on federal and state regulators’ minds. She said the situation might persist, and attention on that will be intensified due to Binance and other cases brought by the Department of Justice (DOJ) and other global authorities.
‘Socializing’ Crypto Companies
Harris claimed that ‘socializing’ crypto companies to the regulatory environment is one of the challenges NYDFS is facing. She said that for them, they have always strived to socialize their firms.
Harris also stressed that financial services firms such as insurance firms, banks, or mortgage lenders are ‘accustomed to having regulators and are aware of what the interaction should be like.’
Harris said a ‘tone reset’ was needed with NYDFS introducing the regulations and its expectations of crypto companies and introducing enforcement interventions where required. Further, she cited the regulator’s $30M case against Robinhood and $100M case against Coinbase as examples.
Crypto Projects Lagging in Compliance
According to Harris, the business scales quicker compared to the compliance apparatus. She pointed out that in most cases where organizations have failed to adhere to its rules, ‘they are nearly exclusive around illegal finance and cybersecurity contraventions.’
Harris also asserted that crypto companies must ‘resource compliance correctly.’ Despite much talk regarding blockchain technology being suitable for strong KYC, this has yet to materialize.
Harris said that after investigating their firms, they get reams of papers in offices, which is shocking. She added that to be a part of the ecosystem, the financial services firm must be mature.
