Westin posed the question in light of bitcoin’s temporary drop in value on Sunday, reportedly caused by regulatory pressure. Westin said problems with Coinbase and Gemini reportedly caused a 20% drop in bitcoin’s value yesterday.
“We’re making sure that they do the things they need to do,” Vullo said, regarding companies that her agency regulates. She said the department imposes capital requirements on regulated companies. She said there are six bitcoin related companies licensed by the department.
Vullo said the application process for a state bitcoin license is lengthy and vigorous. “We want to know who owns the company,” Vallo said, in addition to knowing that the companies have appropriate capital and liquidity. She said the procedure is similar to that of regulating banks and insurance companies.
“We want to know who officers and directors are of the company,” she said. “We want to make sure that they have policies and procedures with anti-money laundering controls. We want to make sure that they have robust cyber security protections.”
Asked what the department did when the bitcoin price began to “crash” Sunday, Vullo said they were in contact with the companies, but did not wish to give details about the content of that contact.
“Obviously those types of things could happen once in a while,” Vullo said about the price drop. “The currency then went back up afterwards, and that’s a good thing.”
She said there was not a lot of traffic on the exchanges, which shows the currency’s growth. “As regulators, I think we have to be on top of that, but we have to foster that type of innovation,” she said.
Vullo said the agency will be in a position to protect consumers should the federal government retreat from supporting the Consumer Financial Protection Board (CFPB), in light of the Trump Administration’s criticism of the CFPB.
Westin asked Vullo to explain the overlap between the state government and the CFPB. He noted there is litigation in process over who actually runs the board.
Westin said the Trump Administration has demonstrated skepticism about the CFPB. If the administration retreats from supporting CFPB, Westin asked Vullo if the state has the means to supply the services that CFPB has provided.
“We will do what we can in New York to protect New Yorkers,” Vullo told Westin. Since the government created the CFPB, New York State has had a “terrific” relationship with it, Vullo said.
She added that under the Dodd Frank Act, the state has the ability to bring cases against parties.
Featured image from Shutterstock.
Last modified: July 13, 2020 3:10 AM UTC