NYDFS Not Afraid to Take Legal Actions Against Defaulting Crypto Companies: Superintendent Harris
The momentum of cryptocurrency regulation in the United States continues to intensify, with the New York Department of Financial Services (NYDFS) asserting its readiness to call out defaulting businesses.
Speaking at a Financial Times (FT) event, NYDFS Chief Adrienne Harris emphasized the regulator’s commitment to taking necessary enforcement actions against any cryptocurrency firm that fails to adhere to its stated guidelines.
The event, tagged “Crypto and Digital Assets Summit: Winter Edition,” is an annual conference that brings together leaders from traditional financial and blockchain ecosystems to share insights.
Notable figures from the industry and regulatory landscape, including Binance’s CEO Richard Teng, Commodity Futures Trading Commission (CFTC) Commissioner Kristin Johnson, Biswarup Chatterjee of CitiGroup, Sasha Mills of the Bank of England (BoE), among others, were in attendance.
Continuing her remarks, Harris highlighted that her priority upon assuming leadership at NYDFS was establishing clear guidelines, which she termed a ‘tone reset.’
This approach ensures crypto companies understand the regulator’s expectations regarding their operations to stay in its good books.
Referencing recent regulatory actions, Harris cited the concerted efforts by US agencies to address compliance issues with the Binance exchange.
“We’ve been talking about the illicit finance component of cryptocurrencies. I think that’s going to continue, and attention on that is going to be heightened as a result of Binance and some of the other cases that have been brought by DOJ and other authorities around the world,” Harris said, referring to the US DoJ-led regulatory action against the Binance exchange.
The world’s largest Bitcoin trading firm was recently fined $4.3 billion for money laundering and other charges.
As part of the regulatory action, founder Changpeng Zhao (CZ) was asked to step down from his role as the CEO. CZ was also fined $50 million for his role in the entire situation.
NYDFS has already made a mark in recent years after initiating enforcement actions against Nasdaq-listed Coinbase and commission-free stock trading platform Robinhood.
That one there was a violation
Earlier this year, #coinbase was ordered to pay a $50M fine to regulators after the NYDFS discovered that it allowed customers to open accounts without doing full background checks. (This is a violation of Anti-money laundering laws).
Coinbase… pic.twitter.com/0eGiLlE8zv
— The O Show (Wendyo.eth) (@The_O_Show_) November 30, 2023
In the case of Coinbase, NYDFS alleged inadequate background checks on new customers, resulting in a $50 million fine for lack of proper know-your-customer (KYC) processes.
BREAKING: New York's top financial regulator has imposed a $30 million fine on Robinhood's crypto trading unit, for allegedly failing to maintain anti-money laundering and cybersecurity programs.
This is the first, but unlikely the last, crypto-sector enforcement action by NYDFS
— Mario Nawfal (@MarioNawfal) August 2, 2022
Likewise, Robinhood was fined $30 million for allegedly violating anti-money laundering (AML) and cybersecurity regulations.
Crypto Regulation Picking Up Pace Globally
Regulatory action is picking up the pace globally as governments seek control over the burgeoning industry.
However, in the United States, there is currently no concerted regulatory framework that crypto businesses can reference.
In contrast, Europe, as the third-largest continent globally, has proactively moved to introduce essential clarity into the decentralized ecosystem through the Markets in Crypto Assets (MiCA) framework.
MiCA, which is based on existing EU rules for securities trading, is geared towards ensuring compliance across the ecosystem.
