New NY Crypto Task Force Looks for Balance in Regulation, Growth: Assemblyman Vanel

By Michael Teich and Tanaya Macheel

New York is getting into a crypto state of mind with plans to create the nation's first Crypto Task Force.

"New York State is the financial capital of the world, and we must have the proper regulations and proper balance to be able to figure out how to regulate in this space," N.Y. Assemblyman Clyde Vanel told Cheddar.

Vanel, who represents Assembly District 33 in Queens, serves as chair of the subcommittee on internet and new technologies. He said the challenge is to create an environment that encourages innovation and investment, while protecting New Yorkers as cryto becomes more common.

"There are pizzerias in New York where you can buy pizza with bitcoin," he noted.

The cryptocurrency task force will consist of investors, technologists, and academics who study how to regulate, define and use cryptocurrency, according to Vanel. Last week, New York State Gov. Andrew Cuomo signed into law the Digital Currency Study Bill. Vanel sees several use cases for blockchain, particularly for voting and record keeping in the state education system.

He cited one example for immediate positive impact. "Three years ago, in Brooklyn, 127,000 voter records were expunged," he said. "If that information was on the blockchain, that would not have happened."

In a Facebook post, Vanel suggested that the cryptocurrency industry has developed so much since the formulation of the BitLicense — the controversial regulatory framework for cryptocurrency businesses developed by the New York State Department of Financial Services in 2015 — that updates or reforms might be in order.

“It has been in ten years since the advent of cryptocurrency. It has been nearly four years since the implementation of the BitLicense. In the cryptocurrency space and technology in general, a few months is equivalent to years,” he wrote.

The DFS has only ever granted 14 BitLicenses. Many participants and observers of the space have found the BitLicense prohibitive for small companies that want to work with the emerging technology but don't have much access to capital or legal resources. Its one-size-fits-all approach to regulating crypto companies has also been seen as stifling to innovation. At the time, it was written to regulate mostly cryptocurrency wallets and exchanges, but since then, hundred of projects, new concepts, and use cases have emerged in the space.

Vanel declined to directly address the possibility of any potential plans for reform on Cheddar.

“New York was on the cutting edge four years ago ... when they came out with the BitLicense." But since then, he added, the space has changed drastically.

The task force is expected to deliver reports by December 15, 2020. Vanel acknowledged that much can change in the crypto space over the next two years, but argued the findings will remain relevant despite the distant deadline.

"We could have had deliverables much shorter but we want to be able to make sure we have an evergreen report, so we can figure out where cryptocurrency, where blockchain is going in the next five, ten years." "We may have a golden goose. If we stifle it too much, we can kill the goose."

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