On July 23, the New York State Department of Financial Services (the “DFS”) issued a press release announcing the establishment of a new Research and Innovation Division (the “Division”) within the DFS.
The Division will take on the responsibility of licensing and supervising entities engaged in “virtual currency business activity” that fall within the scope of New York’s BitLicense regime, in addition to supporting market innovation within the state’s financial services industry more generally.
Newly appointed DFS Superintendent Linda Lacewell stated that the establishment of the Division “positions 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.”
For market participants in the blockchain and digital assets industry, this development should indicate progress. Among the complaints most frequently levied against New York State’s beleaguered BitLicense regime, inadequate efficiency in processing applications and a perceived lack of technological expertise within the DFS are often near the top of the list. The establishment of the Division should theoretically help to mitigate these concerns.
Nevertheless, some will certainly take the position that short of re-tooling the rules of the BitLicense itself, New York State will remain an undesirable location for operating certain blockchain and digital asset businesses. Perhaps the New York State Digital Currency and Blockchain Task Force, established earlier this year with a mandate to review and make recommendations concerning the impact of the BitLicense regime, will provide an impetus for such change.