What can Eric Adams do?Limitations of turning New York City into an encryption hub

Although his actual term in the New York City government will begin in about 1.5 months, the city’s elected mayor Eric Adams has begun to govern through propaganda. Making Empire City more business- and technology-friendly is at the core of Adams’ oral plan agenda, and-to the delight of the crypto community-the incoming mayor has repeatedly emphasized his support for all things Bitcoin (Bitcoin).

In the days following the victory on November 2, former Brooklyn District Mayor and former police officer Adams issued a series of cryptocurrency-friendly statements, ranging from promises to Pay his first three salaries with Bitcoin It is recommended to open a digital finance course Include in the school curriculum.

However, the Mayor’s Office is only one of several power centers that have a say in setting financial industry rules—not the most influential one. New York State’s current regulatory powers make it one of the more difficult jurisdictions for crypto businesses in the United States. So, what power does the mayor of New York City have to introduce real change?

The state of cryptocurrency regulation in New York

For one of the world’s major financial centers, obtaining a top city official who is dedicated to cryptocurrency is a welcome development. New York is considered to be one of the most challenging jurisdictions in the United States for businesses involving digital assets, as Gary DeWaal, Chairman of the Financial Markets and Regulatory Practices of Katten Law Firm, told Cointelegraph.

According to DeWaal, the main reason for this difficulty is New York’s BitLicense system, which requires entities engaged in a wide range of crypto-related activities involving New York State or its residents to obtain a special license from the New York State Department of Financial Services.

Such activities include receiving digital currency for transmission or transmission; storing, holding or maintaining encrypted currency on behalf of others; buying and selling encrypted currency or providing transaction services as a customer business; controlling, managing, or issuing digital currency.

Konstantin Boyko-Romanovsky, CEO of the blockchain company Allnodes, pointed out to Cointelegraph that mining activities do not require BitLicense, nor do they require companies that provide services and products in exchange for cryptocurrency. He added: “This is a beginning, but it is a narrow niche market that needs to be expanded.”

Bo Oney, director of compliance at Bitcoin ATM provider Coinsource (one of the first companies in New York State to receive a BitLicense), stated that the purpose of these regulations has always been to protect consumers, deter bad actors, and establish cryptocurrency companies’ operational and accountability requirements . Nonetheless, O’Neill admits that the management of these rules is often far from seamless:

“Of course, the time and delay of receiving BitLicense is really frustrating. Simplifying the application process and shortening the communication time with NYDFS should be the top priority for improvement.”

Side effects of BitLicense

Last week, the community-centric encryption project CityCoins launched NewYorkCityCoin (NYCCoin)-a digital asset that allows users to fill the city’s treasury through mining, while receiving rewards through the Stacks protocol and its native STX tokens.Although CityCoins has not formally collaborated with New York City on the program, Adams has Warmly welcome the arrival of NYCCoin.

However, there is a problem. New Yorkers have no legal way to mine coins designed to support their city.

Cointelegraph’s senior copy editor Jonathan DeYoung (Jonathan DeYoung), a New Yorker, recently wrote an article Cointelegraph Magazine New York Encryption Guide — Note that as a resident of New York State, he cannot buy STX because he cannot buy STX on any exchange holding BitLicense:

“STX is needed to mine NYCCoin, which means that even though I live in New York, I can’t actually mine NYCCoin. Of course, people can use a VPN and buy it through a non-KYC platform like Binance, but the irony is that Ordinary residents of New York City will be prohibited from mining their own city’s coins.”

Although in the short term, this contradiction can be overcome by increasing support for tokens by exchanges holding BitLicense like Coinbase, but in a more general scenario, this suggests that the existing regulatory system may keep New Yorkers away The meaningful part of the infrastructure of digital assets.

Unfriendly law enforcement

Another source of concern for crypto companies hoping to provide services to New York residents is the New York State Attorney General’s Office.The current Attorney General Letitia James once announced that she intends to run for governor next year Take stringent enforcement actions Oppose crypto industry participants and A lot of warnings The dangers of cryptocurrency trading.

In fact, even before James took office in early 2019, NYAG has been conducting a more stringent review of the digital asset business. Katten’s DeWaal commented on Cointelegraph:

“The September 2018 Virtual Market Integrity Initiative report issued by the Attorney General of New York consists of a specific-named encryption platform and its compliance with certain best or suspected problematic practices-after the platform voluntarily provides certain relevant information-did not help Promote New York as a blockchain technology-friendly area.”

DeWaal insists that this method is best described as public naming and humiliation, rather than “eradicating bad apples through due legal process.”

What can be done?

Changes to the BitLicense system that allow more companies to remove compliance barriers and simplify the approval process may be an important step towards making New York a more popular cryptocurrency destination. However, as DeVal said, this is not in Adams’s control:

“Ultimately, the New York State Department of Financial Services will work to expedite the Bitlicense application process and determine legal requirements that may be interpreted in a more business-friendly manner.”

A more radical change to the BitLicense system requires action by the Albany State Legislature.

Oney has observed that one method that has worked elsewhere is to establish a regulatory sandbox to stimulate financial innovation. He commented on Cointelegraph:

“Other jurisdictions have been very successful in promoting innovation through the sandbox, such as the FCA in the United Kingdom. Early technology companies can directly communicate with leading institutions in the sandbox and test and verify the applicability of the solution in practice.”

Although the creation of a fintech sandbox in New York City will certainly require cooperation between multiple city agencies, it is reasonable to expect the mayor to take the lead in this type of work.

Finally, there is a complete set of tools that belong to the field of propaganda. From raising awareness of the benefits and opportunities of blockchain technology and digital assets, to appointing a deputy mayor focused on strategically promoting fintech-related initiatives, the role of the New York City government administration is to solve a daunting problem Provides a wide range of space. An audience of over 8 million potential cryptocurrency allies.