Eric Adams, New York City mayor elect is doing everything in his power to transform New York into a crypto community.
Although his current term as leader of New York City begins in about a month and a half, Eric Adams, the city's elected mayor, has already begun publicity to rule. Making Empire City more business and technology friendly is at the heart of Adams' vocal agenda, and much to the delight of the crypto community, the new mayor has repeatedly expressed his support for all Bitcoin (BTC). In the days following his November 2 victory, Adams, a former Brooklyn president and former police officer, made a series of crypto-friendly statements ranging from a promise to take his first three salaries in bitcoin to a proposal for a digital finance course to include a curriculum at school.
However, the mayor's office is only one of several centers of power that help determine the rules of the financial industry - and not the most influential. The current regulator in New York State makes it one of the stricter US jurisdictions for navigating crypto businesses. What power does the Mayor of New York have to make real change? Let’s find out:
- New York State Crypto regulation
- BitLicense side effects
- Unfriendly app
- What can be done
New York State Crypto Regulation
Getting senior city officials to handle cryptocurrencies is a welcome development for one of the world's largest financial centers. New York is considered one of the toughest jurisdictions in the United States to handle digital assets, Gary Dewaal, head of financial practice and regulation at law firm Katten, said. According to DeWaal, the main reason for this difficulty is New York's BitLicense regime, which requires companies involved in various crypto-related activities, including the state of New York or its residents, to obtain a special license from the state's Financial Services. Department.
These activities include receiving or sending digital currency for transmission; Store, hold or manage cryptocurrency business on behalf of third parties; Buy and sell crypto or exchange services such as customer deals; and control, management or issuance of digital currency. Konstantin Boyko-Romanovski, CEO of blockchain company Allnodes, said that BitLicense is not required for mining activities or for companies offering their services and products in exchange for cryptocurrencies. He added, “This is a start, but it is a narrow niche and needs to be expanded.
Bo Uni, head of compliance at Bitcoin ATM operator Coinsource, one of the first companies to receive a BitLicense in New York State, said the purpose of the regulation has always been to protect consumers, look after bad customers, and establish operational terms and conditions of liability for cryptocurrency companies. However, Oney admits that managing these rules is often far from smooth: "It is true that the time and delay in obtaining a BitLicense can be frustrating. Streamlining the application process and increasing the NYDFS correspondence time should be a top priority for improvement.
BitLicense side effects
Last week, community-focused crypto project CityCoins launched NewYorkCityCoin (NYCCoin), a digital asset that users can mine to add to the city's coffers while winning prizes via the Stacks protocol and their own STX token. While CityCoins has not officially partnered with New York for this initiative, Adams is enthusiastically welcoming NYCCoin. But there is a catch. There is no legal way for New Yorkers to dig up coins meant to save their city. Jonathan DeYang, a New Yorker who recently wrote a New York crypto guide, noted that as a New Yorker, he had no way of buying STX because it was not available on any Exchange.
"STX is required to dig NYCCoin, which means I can't really dig NYCCoin even though I live in New York. Of course, you can use a VPN and buy it through a platform that isn't KYC, like Binance, but it's ironic that the average New York was forbidden to dig coins in his own city. While this contradiction can be overcome in the short term with BitLicense exchanges like Coinbase, which provide token support, more generally it suggests that the current regulatory system could cut New Yorkers off a significant chunk of digital asset infrastructure.
Another cause for concern for crypto companies looking to provide services to New Yorkers is the New York attorney general's office. Leticia James – the current attorney general who announced her intention to run for governor next year – has historically demanded tougher enforcement of cryptocurrency gamblers and has extensively warned of the dangers of cryptocurrency trading.
In fact, NYAG had tighter control over the digital asset business even before he took office in early 2019. Kattens DeWaal commented: "The publication of a September 2018 report by the New York Attorney General on the Virtual Markets Integrity Initiative, identified by name-specific crypto platforms and their adherence to best practices or suspected of being problematic - after information was voluntarily provided" by the platform - es not helpful in promoting New York as a place for blockchain technology."
This approach, according to DeWaal, could better be described as public attribution and shame than "getting rid of the bad apples through due process".
What can be done
Introducing changes to the BitLicense regime that will allow more companies to revoke compliance keys and streamline the approval process could be an important step in making New York a more crypto-friendly destination. However, this is not out of Adams' hands, as Dewaal puts it: "Ultimately, the New York State Department of Financial Services will try to speed up the Bitlicense application process and establish legal requirements that can be made more business-friendly.
Albany state lawmakers must take action to make broader changes to the BitLicense regime. Oney found that one approach that worked well elsewhere was to create a regulatory sandbox to stimulate financial innovation. He commented further: “Other jurisdictions have been particularly successful at stimulating innovation through sandstone, such as the FCA in the UK, where technology companies can use their sandbox to exchange ideas directly with leading institutions at an early stage and test and verify the implementation of solutions in practice.
While creating a fintech sandbox in New York will definitely require the collaboration of several city authorities, it's reasonable to expect the mayor to lead such an effort. After all, there is a complete arsenal of tools belonging to the advertising field. From raising awareness of the benefits and opportunities of blockchain technology and digital assets to appointing a vice mayor with an emphasis on strategically promoting fintech initiatives, the New York government's executive role offers a lot of freedom to serve an audience of more than 8 million. potential crypto ally.