NYDFS Superintendent Harris has called for “real time” regulation of crypto, according to Axios:
“Harris appears to want to tighten the screws on crypto regulation, with what she’s calling: “real-time supervision.” “This idea that regulators should just come in once a year, go through books and interview staff … was fitting maybe for the 20th-century financial system, but certainly not for 21st century,” she said. Takeaways:
• This is by no means a novel concept for financial services regulation, but would appear to be novel for crypto.
• By example, for many years DFS and other banking regulators permanently seated examiners within a large financial institution.
• The examiners had frequent conversations with representatives of the institution, and provided “real-time” feedback to the regulator on liquidity and other matters.
• This practice was controversial, as some deemed it “regulatory capture.”
• For its application to crypto, it remains to be seen what the Superintendent has in mind. Blockchain analytics tools, which the Superintendent previously indicated would be employed more frequently by NYDFS in detecting fraud, may be part of this regulatory approach.