New York State Department of Financial Services Announces a New Research and Innovation Division

Since 2014 New York has been establishing itself as one of the most regulation-heavy jurisdictions for companies in the cryptocurrency sphere. The state first received notoriety as a crypto-unfriendly territory when the infamous BitLicense proposed by Benjamin Lawsky led to an “exodus” of bitcoin startups, among which was Kraken, one of the biggest fiat gateways to date.

As of today the regulatory authority will be subject to an internal restructuring process. As announced by DFS superintendent Linda A. Lacewell, a new Research and Innovation Division will be created, which will oversee the licensing of cryptocurrency companies. BitLicense issuance responsibilities will also be delegated to the RID.

The official announcement states that the primary responsibility of the new division will be to “assess new efforts to use technology to address financial exclusion; identify and protect consumer data rights; and encourage innovations in the financial services marketplace”.

The restructuring process will improve the DFS’s level of understanding of the innovative proposals by crypto startups. However, when it comes to expectations about the business environment in New York, very few have been expressing an optimistic attitude.

Judging by the history of BitLicense, an effort to deregulate the industry could have a more positive impact than additional regulatory burden. One piece of the puzzle which did not exist previously when BitLicense was proposed, was the positive example of jurisdictions such as Wyoming, a state that is quickly establishing itself as a cryptocurrency hub, thanks to the efforts of the Wyoming Blockchain Coalition.