NYDFS Chief Defends State Regulator's Crypto Approach

New York Department of Financial Services superintendent Maria Vullo defended her office's approach to regulating cryptocurrencies on Thursday.

Speaking at the Council on Foreign Relation's "Legal Tender? The Regulation of Cryptocurrencies" panel in New York on Wednesday, Vullo said that her view is "regulation in this space, just like any space where you have money transmission, [is necessary]," making a point she often revisited during the discussion.

While some state and federal regulars are taking time to create rules for the industry, "it certainly hasn't taken New York long to establish a framework" for regulating cryptocurrencies, Vullo said in her opening statement, referring to the state's controversial BitLicense.

The role of regulation in the cryptocurrency space was a contentious topic, with Blockchain president and chief legal officer Marco Santori claiming regulators should ease up on the over-regulation.

That said, he did acknowledge that "a lot of token sales run afoul of the spirit of the law, if not the letter of the law. But we have to be careful not to lump them all together."

In particular, he argued that New York's laws "have been an abject failure."

However, Vullo derided developers who claim that their work should allow them to launch token sales free of disclosure or other requirements, saying:

"I think regulators absolutely need to be in the space, I know they're saying 'we're innovative, we're startups, we need to be left alone and put in a sandbox.' Toddlers play in the sandbox. Adults play by the rules."

In another rapid exchange, CNN investigative journalist and panelist Jose Pagliery expressed concern about the idea that "code is law," saying that while this may be true, coders can modify certain protocols:

"If you're the executive at a bank, you have people to answer to … if you're one of a dozen coders around the world whose name no one knows and you're the one at the controls changing how this cryptocurrency works … we have to figure out how these people are held accountable."

Santori disagreed with this premise, saying "that is not only a bad question, you should feel bad for asking it."

In turn, Vullo said: "I didn't know this was about feelings."

Seema Mody, Jose Pagliery, Marco Santori and Maria Vullo image by Nikhilesh De for CoinDesk