1 00:00:00,080 --> 00:00:02,480 Speaker 1: Some of the major factors that will define crypto in 2 00:00:02,520 --> 00:00:06,320 Speaker 1: the US, our regulation and cybersecurity. For more on that, 3 00:00:06,360 --> 00:00:09,240 Speaker 1: we are joined by New York's top banking cop, New 4 00:00:09,320 --> 00:00:13,720 Speaker 1: York Department of Financial Services Superintendent Adrian Harris, And you're 5 00:00:13,800 --> 00:00:16,239 Speaker 1: down in DC today. But of course New York has 6 00:00:16,280 --> 00:00:18,800 Speaker 1: been a place where many crypto companies have been able 7 00:00:18,880 --> 00:00:21,360 Speaker 1: to start up and operate. You are an early mover 8 00:00:21,680 --> 00:00:24,639 Speaker 1: on some of the guidelines you saw around more progressive 9 00:00:24,920 --> 00:00:28,400 Speaker 1: parts of the industry, like stable coins. One thing I'm 10 00:00:28,440 --> 00:00:32,040 Speaker 1: wondering is you're seeing fintech companies really take off in 11 00:00:32,120 --> 00:00:36,360 Speaker 1: the stable coin landscape, PayPal stripe. How do you think 12 00:00:36,400 --> 00:00:39,199 Speaker 1: stable coins might become a much bigger part of the 13 00:00:39,240 --> 00:00:42,360 Speaker 1: payment's landscape moving forward, and what's going to take to 14 00:00:42,400 --> 00:00:43,080 Speaker 1: facilitate that. 15 00:00:43,640 --> 00:00:45,720 Speaker 2: I think as we think about stable coins, they are 16 00:00:45,720 --> 00:00:49,559 Speaker 2: obviously becoming more prolific, as you noted, and more and 17 00:00:49,640 --> 00:00:52,879 Speaker 2: more traditional companies are getting involved in the space. For 18 00:00:53,040 --> 00:00:55,800 Speaker 2: us in New York, we've got strong regulations on the books. 19 00:00:55,800 --> 00:00:59,200 Speaker 2: We've added to that with guidance in particular about stable coins. 20 00:00:59,440 --> 00:01:03,040 Speaker 2: We're engaged here in DC with Congress and with international regulators. 21 00:01:03,080 --> 00:01:06,240 Speaker 2: So I think having that transparent framework and those rules 22 00:01:06,240 --> 00:01:08,000 Speaker 2: of the road are really what's going to help both 23 00:01:08,040 --> 00:01:12,440 Speaker 2: facilitate the responsible growth of this space and protect consumers 24 00:01:12,440 --> 00:01:13,480 Speaker 2: and markets at the same time. 25 00:01:13,680 --> 00:01:17,640 Speaker 3: Well, speaking of that space, I'm wondering about the regulatory 26 00:01:17,720 --> 00:01:20,000 Speaker 3: environment and what you see as the role of states 27 00:01:20,080 --> 00:01:23,280 Speaker 3: versus the federal government when it comes to regulating the industry. 28 00:01:23,280 --> 00:01:25,360 Speaker 3: What is the role of the state and what's the 29 00:01:25,400 --> 00:01:26,400 Speaker 3: role of the federal government. 30 00:01:27,080 --> 00:01:29,440 Speaker 2: Yeah, well, let me say we would love nothing more 31 00:01:29,480 --> 00:01:31,480 Speaker 2: than to have a federal partner in this space. But 32 00:01:31,520 --> 00:01:34,040 Speaker 2: as you noted, there is a real role for states 33 00:01:34,080 --> 00:01:36,920 Speaker 2: because we can move so nimbly and stay abreast of 34 00:01:36,959 --> 00:01:39,640 Speaker 2: both opportunities and risks. And I think New York is 35 00:01:39,680 --> 00:01:42,600 Speaker 2: a perfect example where we've been regulating virtual assets for 36 00:01:42,640 --> 00:01:45,720 Speaker 2: almost a decade. We were very early with guidance on 37 00:01:45,800 --> 00:01:50,000 Speaker 2: stable coins and very conservative and rigorous requirements in the space. 38 00:01:50,360 --> 00:01:52,560 Speaker 2: And often when people talk about the states, they talk 39 00:01:52,560 --> 00:01:55,280 Speaker 2: about this race to the bottom. But what we've seen 40 00:01:55,440 --> 00:01:57,600 Speaker 2: is to the contrary, where in New York we have 41 00:01:57,640 --> 00:02:00,440 Speaker 2: the most rigorous standards anywhere in the world been able 42 00:02:00,480 --> 00:02:05,240 Speaker 2: to protect consumers but also create a thriving, healthy, responsible marketplace. 43 00:02:05,520 --> 00:02:07,440 Speaker 3: So how do you create how do you make this 44 00:02:07,480 --> 00:02:09,720 Speaker 3: a feature and not a bug when it comes to 45 00:02:10,520 --> 00:02:13,160 Speaker 3: states pitting themselves against one another. How do you make 46 00:02:13,160 --> 00:02:16,920 Speaker 3: sure people stay in New York and don't move outside 47 00:02:16,919 --> 00:02:19,800 Speaker 3: of the state or outside of the US. 48 00:02:22,560 --> 00:02:25,799 Speaker 2: Yeah, well, what we've seen is having that transparency and rigor. 49 00:02:25,840 --> 00:02:28,600 Speaker 2: When early on people thought it was too onerous, Now 50 00:02:28,639 --> 00:02:31,320 Speaker 2: what they've come to see is it's actually really a 51 00:02:31,360 --> 00:02:34,720 Speaker 2: good housekeeping seal of approval. So saying that you pass 52 00:02:34,800 --> 00:02:37,840 Speaker 2: these rigorous standards, that you can meet the same cybersecurity 53 00:02:37,840 --> 00:02:41,079 Speaker 2: requirements as banks, that you can meet the same BSAAML 54 00:02:41,160 --> 00:02:44,840 Speaker 2: requirements as banks, really is that good housekeeping seal. And 55 00:02:44,880 --> 00:02:47,239 Speaker 2: I think it's good when investors see it. It's good 56 00:02:47,240 --> 00:02:50,600 Speaker 2: when other regulators and other jurisdictions see it. So rather 57 00:02:50,639 --> 00:02:55,120 Speaker 2: than repelling industry to less rigorous regimes and frameworks, what 58 00:02:55,240 --> 00:02:58,200 Speaker 2: we see is it really attracts companies and investment, and 59 00:02:58,240 --> 00:02:59,200 Speaker 2: I think that's a great thing. 60 00:03:00,000 --> 00:03:03,480 Speaker 1: Regulation and then there's enforcement. And I'm curious about what 61 00:03:03,520 --> 00:03:06,880 Speaker 1: you're seeing in terms of potential future cases. Are there 62 00:03:07,040 --> 00:03:11,520 Speaker 1: big cases down the pike for crypto firms, for stable 63 00:03:11,560 --> 00:03:14,440 Speaker 1: coin firms, or even market makers in the space at 64 00:03:14,440 --> 00:03:15,119 Speaker 1: this juncture. 65 00:03:15,639 --> 00:03:18,000 Speaker 2: Yeah, absolutely, I mean I think for us, we really 66 00:03:18,040 --> 00:03:20,160 Speaker 2: make sure we're using the full suite of tools at 67 00:03:20,160 --> 00:03:24,680 Speaker 2: our disposals, so rulemaking, guidance, and then when necessary, enforcement 68 00:03:25,000 --> 00:03:27,200 Speaker 2: And we've brought some big enforcement cases in New York 69 00:03:27,240 --> 00:03:30,160 Speaker 2: one hundred million dollars against coinbase. We got two point 70 00:03:30,200 --> 00:03:33,280 Speaker 2: one billion dollars back for consumers in an enforcement action 71 00:03:33,360 --> 00:03:36,640 Speaker 2: against Gemini Earn. So there's definitely a place for enforcement. 72 00:03:36,960 --> 00:03:40,000 Speaker 2: You will see more from dfs and from other regulators, 73 00:03:40,160 --> 00:03:43,560 Speaker 2: but it should be as a compliment to transparent rulemaking 74 00:03:44,120 --> 00:03:46,600 Speaker 2: and to guidance that we've done at the state level. 75 00:03:46,920 --> 00:03:50,120 Speaker 1: Are there particular problems with the market making space in 76 00:03:50,160 --> 00:03:52,520 Speaker 1: the crypto industry When you're looking at your focus on 77 00:03:52,600 --> 00:03:55,240 Speaker 1: enforcement in particular, what are the issues you're most looking 78 00:03:55,280 --> 00:03:55,680 Speaker 1: out for. 79 00:03:58,680 --> 00:04:00,960 Speaker 2: Yeah, I think the big issues we see with crypto 80 00:04:01,440 --> 00:04:03,640 Speaker 2: in additions in the market making space. I mean, there 81 00:04:03,680 --> 00:04:06,840 Speaker 2: is certainly that potential for fraud, and we've issued guidance 82 00:04:06,880 --> 00:04:09,920 Speaker 2: on market manipulation where we see the biggest areas of 83 00:04:10,000 --> 00:04:14,840 Speaker 2: vulnerability or often around illicit finance or the AMLBSA frameworks 84 00:04:15,160 --> 00:04:20,560 Speaker 2: and cybersecurity, but the market manipulation, fraud, marketing schemes. Those 85 00:04:20,640 --> 00:04:23,479 Speaker 2: kinds of things are also top of mind and why 86 00:04:23,520 --> 00:04:26,160 Speaker 2: we've issued guidance around those areas, and I think you 87 00:04:26,200 --> 00:04:28,400 Speaker 2: will see enforcement from us where necessary. 88 00:04:28,839 --> 00:04:31,279 Speaker 3: Okay, I want to talk a little bit about politics 89 00:04:31,320 --> 00:04:33,520 Speaker 3: because we're just a couple of weeks out from the 90 00:04:33,560 --> 00:04:35,680 Speaker 3: elections here. I know, I don't need to tell you 91 00:04:35,680 --> 00:04:38,240 Speaker 3: that you worked on the Biden Harris transition team back 92 00:04:38,279 --> 00:04:41,240 Speaker 3: in twenty twenty. Are you having conversations with the Harris 93 00:04:41,240 --> 00:04:44,760 Speaker 3: team right now about a role in the administration now? 94 00:04:44,800 --> 00:04:47,839 Speaker 2: I have a wonderful job now in New York State 95 00:04:47,880 --> 00:04:52,320 Speaker 2: where we have a great diversity of institutions that we regulate, 96 00:04:52,360 --> 00:04:55,400 Speaker 2: and really making great policy every day to benefit New 97 00:04:55,480 --> 00:04:58,359 Speaker 2: Yorkers and being a model for the nation and the world. 98 00:04:58,400 --> 00:04:59,719 Speaker 2: So I'm really loving this role. 99 00:05:00,680 --> 00:05:02,800 Speaker 1: You know. One major question is who would be a 100 00:05:02,839 --> 00:05:05,560 Speaker 1: SEC chair in a Harris administration and if there would 101 00:05:05,560 --> 00:05:08,479 Speaker 1: be any change in particular. I'm wondering if you look 102 00:05:08,480 --> 00:05:10,440 Speaker 1: at what's been done, there's been a lot of frustration, 103 00:05:10,520 --> 00:05:13,279 Speaker 1: of course, from the crypto community about this idea of 104 00:05:13,360 --> 00:05:16,279 Speaker 1: regulation by enforcement. Is there anything that you would do 105 00:05:16,320 --> 00:05:19,560 Speaker 1: differently if you were in that spot? 106 00:05:21,240 --> 00:05:23,280 Speaker 2: I think in general, what you've seen from US at 107 00:05:23,320 --> 00:05:26,000 Speaker 2: DFS again is using all the tools that we have 108 00:05:26,080 --> 00:05:28,599 Speaker 2: at our disposal. So I think it's really important to 109 00:05:28,720 --> 00:05:31,000 Speaker 2: write rules and put them through the notice and comment 110 00:05:31,040 --> 00:05:34,480 Speaker 2: period and have that engagements with stakeholders, to use things 111 00:05:34,520 --> 00:05:38,160 Speaker 2: like guidance and FAQs to add additional context and clarity 112 00:05:38,200 --> 00:05:41,839 Speaker 2: and put some meat on the bones as developments continue 113 00:05:41,880 --> 00:05:44,640 Speaker 2: in the space. And then again where necessary, where people 114 00:05:44,760 --> 00:05:48,479 Speaker 2: violate those transparent and rigorous rules, then you also have 115 00:05:48,760 --> 00:05:51,719 Speaker 2: enforcement as a tool as a deterrent to get restitution 116 00:05:51,839 --> 00:05:54,200 Speaker 2: for consumers and to meet other public policy goals. So 117 00:05:54,240 --> 00:05:58,000 Speaker 2: in my mind, really leveraging the full suite of regulatory 118 00:05:58,040 --> 00:06:00,360 Speaker 2: tools is what a regulator should do and and a 119 00:06:00,360 --> 00:06:01,720 Speaker 2: really successful model for us. 120 00:06:01,720 --> 00:06:04,320 Speaker 1: In New York, you know, New York City, financial capital 121 00:06:04,400 --> 00:06:07,240 Speaker 1: of the world. When it comes to the rules that 122 00:06:07,360 --> 00:06:09,479 Speaker 1: large banks are about to face, there seems to be 123 00:06:09,560 --> 00:06:13,520 Speaker 1: this standstill among regulators around this long awaited capital plan. 124 00:06:13,880 --> 00:06:15,520 Speaker 1: What do you make of that gridlock? 125 00:06:16,279 --> 00:06:18,640 Speaker 2: Yeah, I think you know, these are really hard problems 126 00:06:18,640 --> 00:06:21,599 Speaker 2: when you think about capital rules or any rules where 127 00:06:21,600 --> 00:06:25,680 Speaker 2: you're trying to harmonize international requirements with things here in 128 00:06:25,720 --> 00:06:28,160 Speaker 2: the US. So it is quite complex, But I think 129 00:06:28,240 --> 00:06:32,039 Speaker 2: it speaks to the need for continued engagement between government actors, 130 00:06:32,400 --> 00:06:35,000 Speaker 2: industry academics. It's something we really try to model at 131 00:06:35,040 --> 00:06:38,480 Speaker 2: DFS as making sure we're engaging with all of our stakeholders, 132 00:06:38,839 --> 00:06:41,000 Speaker 2: surfacing all the data that we need to make the 133 00:06:41,000 --> 00:06:44,800 Speaker 2: best policy decisions. So I'm hopeful that this gridlock will 134 00:06:44,839 --> 00:06:47,240 Speaker 2: release soon and we can have good rules on the 135 00:06:47,279 --> 00:06:49,479 Speaker 2: books for the banks here in the US. 136 00:06:49,839 --> 00:06:51,839 Speaker 3: Well, before we let you go, we're going everywhere with you, 137 00:06:51,880 --> 00:06:54,120 Speaker 3: and we appreciate your time today, But I want to 138 00:06:54,160 --> 00:06:56,520 Speaker 3: get an update from you about what consumers could think 139 00:06:56,520 --> 00:07:00,880 Speaker 3: about the insurance crisis that's threatening ubers and and lifts 140 00:07:01,200 --> 00:07:03,440 Speaker 3: here in New York City. What message do you have 141 00:07:03,480 --> 00:07:07,119 Speaker 3: for them about the viability of the insurance company moving forward, 142 00:07:07,160 --> 00:07:10,040 Speaker 3: or how they will be protected New Yorkers if they 143 00:07:10,040 --> 00:07:12,239 Speaker 3: get into one of these vehicles. 144 00:07:12,600 --> 00:07:15,400 Speaker 2: Yeah. Absolutely, It's a huge problem that we've been dealing with. 145 00:07:15,440 --> 00:07:18,440 Speaker 2: You know, we have large companies in the livery insurance 146 00:07:18,440 --> 00:07:22,559 Speaker 2: space that have been insolvent for decades. Under my tenure 147 00:07:22,600 --> 00:07:25,720 Speaker 2: at DFS, we're confronting that head on, issuing the first 148 00:07:25,720 --> 00:07:29,200 Speaker 2: examination of some of those companies in nearly forty years, 149 00:07:29,240 --> 00:07:31,920 Speaker 2: making sure they have a remediation plan so that they 150 00:07:31,920 --> 00:07:34,240 Speaker 2: can be well capitalized, they can pay claims in a 151 00:07:34,280 --> 00:07:37,560 Speaker 2: timely manner. We're working on a number of legislative proposals 152 00:07:37,600 --> 00:07:40,040 Speaker 2: to shore up the market and bring competition to that 153 00:07:40,120 --> 00:07:44,040 Speaker 2: space so that passengers can be protected, drivers have the 154 00:07:44,080 --> 00:07:47,040 Speaker 2: insurance they need, and that it's an affordable option for them, 155 00:07:47,280 --> 00:07:50,760 Speaker 2: so that we can have that thriving transportation ecosystem in 156 00:07:50,800 --> 00:07:53,960 Speaker 2: New York. But I think it's been left dormant for 157 00:07:54,080 --> 00:07:56,600 Speaker 2: far too long. But under my tenure, we are tackling 158 00:07:56,640 --> 00:07:57,080 Speaker 2: it head on.