Some of the major factors that will define crypto in the US, our regulation and cybersecurity. For more on that, we are joined by New York's top banking cop, New York Department of Financial Services Superintendent Adrian Harris, And you're down in DC today. But of course New York has been a place where many crypto companies have been able to start up and operate. You are an early mover on some of the guidelines you saw around more progressive
parts of the industry, like stable coins. One thing I'm wondering is you're seeing fintech companies really take off in the stable coin landscape, PayPal stripe. How do you think stable coins might become a much bigger part of the payment's landscape moving forward, and what's going to take to facilitate that.
I think as we think about stable coins, they are obviously becoming more prolific, as you noted, and more and more traditional companies are getting involved in the space. For us in New York, we've got strong regulations on the books. We've added to that with guidance in particular about stable coins. We're engaged here in DC with Congress and with international regulators.
So I think having that transparent framework and those rules of the road are really what's going to help both facilitate the responsible growth of this space and protect consumers and markets at the same time.
Well, speaking of that space, I'm wondering about the regulatory environment and what you see as the role of states versus the federal government when it comes to regulating the industry. What is the role of the state and what's the role of the federal government.
Yeah, well, let me say we would love nothing more than to have a federal partner in this space. But as you noted, there is a real role for states because we can move so nimbly and stay abreast of both opportunities and risks. And I think New York is a perfect example where we've been regulating virtual assets for almost a decade. We were very early with guidance on stable coins and very conservative and rigorous requirements in the space. And often when people talk about the states, they talk
about this race to the bottom. But what we've seen is to the contrary, where in New York we have the most rigorous standards anywhere in the world been able to protect consumers but also create a thriving, healthy, responsible marketplace.
So how do you create how do you make this a feature and not a bug when it comes to states pitting themselves against one another. How do you make sure people stay in New York and don't move outside of the state or outside of the US.
Yeah, well, what we've seen is having that transparency and rigor. When early on people thought it was too onerous, Now what they've come to see is it's actually really a good housekeeping seal of approval. So saying that you pass these rigorous standards, that you can meet the same cybersecurity requirements as banks, that you can meet the same BSAAML requirements as banks, really is that good housekeeping seal. And I think it's good when investors see it. It's good
when other regulators and other jurisdictions see it. So rather than repelling industry to less rigorous regimes and frameworks, what we see is it really attracts companies and investment, and I think that's a great thing.
Regulation and then there's enforcement. And I'm curious about what you're seeing in terms of potential future cases. Are there big cases down the pike for crypto firms, for stable coin firms, or even market makers in the space at this juncture.
Yeah, absolutely, I mean I think for us, we really make sure we're using the full suite of tools at our disposals, so rulemaking, guidance, and then when necessary, enforcement And we've brought some big enforcement cases in New York one hundred million dollars against coinbase. We got two point one billion dollars back for consumers in an enforcement action against Gemini Earn. So there's definitely a place for enforcement.
You will see more from dfs and from other regulators, but it should be as a compliment to transparent rulemaking and to guidance that we've done at the state level.
Are there particular problems with the market making space in the crypto industry When you're looking at your focus on enforcement in particular, what are the issues you're most looking out for.
Yeah, I think the big issues we see with crypto in additions in the market making space. I mean, there is certainly that potential for fraud, and we've issued guidance on market manipulation where we see the biggest areas of vulnerability or often around illicit finance or the AMLBSA frameworks
and cybersecurity, but the market manipulation, fraud, marketing schemes. Those kinds of things are also top of mind and why we've issued guidance around those areas, and I think you will see enforcement from us where necessary.
Okay, I want to talk a little bit about politics because we're just a couple of weeks out from the elections here. I know, I don't need to tell you that you worked on the Biden Harris transition team back in twenty twenty. Are you having conversations with the Harris team right now about a role in the administration now?
I have a wonderful job now in New York State where we have a great diversity of institutions that we regulate, and really making great policy every day to benefit New Yorkers and being a model for the nation and the world. So I'm really loving this role.
You know. One major question is who would be a SEC chair in a Harris administration and if there would be any change in particular. I'm wondering if you look at what's been done, there's been a lot of frustration, of course, from the crypto community about this idea of regulation by enforcement. Is there anything that you would do differently if you were in that spot?
I think in general, what you've seen from US at DFS again is using all the tools that we have at our disposal. So I think it's really important to write rules and put them through the notice and comment period and have that engagements with stakeholders, to use things like guidance and FAQs to add additional context and clarity and put some meat on the bones as developments continue
in the space. And then again where necessary, where people violate those transparent and rigorous rules, then you also have enforcement as a tool as a deterrent to get restitution for consumers and to meet other public policy goals. So in my mind, really leveraging the full suite of regulatory tools is what a regulator should do and and a really successful model for us.
In New York, you know, New York City, financial capital of the world. When it comes to the rules that large banks are about to face, there seems to be this standstill among regulators around this long awaited capital plan. What do you make of that gridlock?
Yeah, I think you know, these are really hard problems when you think about capital rules or any rules where you're trying to harmonize international requirements with things here in the US. So it is quite complex, But I think it speaks to the need for continued engagement between government actors, industry academics. It's something we really try to model at DFS as making sure we're engaging with all of our stakeholders, surfacing all the data that we need to make the
best policy decisions. So I'm hopeful that this gridlock will release soon and we can have good rules on the books for the banks here in the US.
Well, before we let you go, we're going everywhere with you, and we appreciate your time today, But I want to get an update from you about what consumers could think about the insurance crisis that's threatening ubers and and lifts here in New York City. What message do you have for them about the viability of the insurance company moving forward, or how they will be protected New Yorkers if they get into one of these vehicles.
Yeah. Absolutely, It's a huge problem that we've been dealing with. You know, we have large companies in the livery insurance space that have been insolvent for decades. Under my tenure at DFS, we're confronting that head on, issuing the first examination of some of those companies in nearly forty years, making sure they have a remediation plan so that they can be well capitalized, they can pay claims in a
timely manner. We're working on a number of legislative proposals to shore up the market and bring competition to that space so that passengers can be protected, drivers have the insurance they need, and that it's an affordable option for them, so that we can have that thriving transportation ecosystem in New York. But I think it's been left dormant for far too long. But under my tenure, we are tackling it head on.