Ripple Swell: NYDFS suggests crypto companies proactively comply, U.S. regulatory pace needs to catch up with Europe

The New York Department of Financial Services (NYDFS) Superintendent Adrienne Harris recently attended the Ripple Swell event in Miami together with Ripple General Counsel Stuart Alderoty to discuss regulatory strategies for cryptocurrencies at different levels in the United States and how crypto companies can effectively address regulatory challenges.

Regulators Dislike "Surprises"

During the discussion, Harris called out to the cryptocurrency industry, saying, "Please be proactive and transparent when dealing with regulators, don't let us find out about issues through the media." She stated that the least thing regulators want to encounter is unexpected situations. Therefore, Harris suggested that cryptocurrency businesses should communicate with regulators in advance when formulating operational plans to avoid unnecessary misunderstandings.

Harris also mentioned that the regulatory environment in New York is more open, encouraging cryptocurrency businesses to bring their "five-year operational plan" to discuss with us. She emphasized that maintaining open communication with regulators helps companies operate under legal and compliant supervision to enhance mutual trust.

Europe has more comprehensive regulations, the U.S. needs to catch up

Compared to Europe, the U.S. has been progressing slower in cryptocurrency regulation. Europe currently has the "Markets in Crypto-Assets Regulation (MiCA)" and the EU's Fifth Anti-Money Laundering Directive (AMLD5) that incorporates cryptocurrencies into anti-money laundering regulations, enabling European countries to collectively regulate cryptocurrencies.

However, in the U.S., the fragmented regulatory landscape due to different views and regulatory directions on cryptocurrencies among multiple regulatory agencies has caused challenges. For example:

• Securities and Exchange Commission (SEC): Considers cryptocurrencies as "securities," especially for crypto projects conducting ICOs. The SEC has filed lawsuits against multiple ICO projects, accusing them of violating securities laws, such as unregistered securities issuance, leading some cryptocurrency businesses to choose to exit the U.S. market.
• Commodity Futures Trading Commission (CFTC): Considers cryptocurrencies like Bitcoin and Ethereum as "commodities," having jurisdiction over derivative trading involving these assets, and allowing some regulated Bitcoin futures and options trading.
• Financial Crimes Enforcement Network (FinCEN): Considers cryptocurrency exchanges as Money Service Businesses (MSBs), requiring them to comply with anti-money laundering (AML) and know-your-customer (KYC) requirements.

In summary, the U.S. still has significant room for improvement in establishing a unified and clear cryptocurrency regulatory framework, which has also limited the industry's development pace.

European crypto venture capital is growing rapidly, with MiCA overwhelmingly passed, fully entering crypto jurisdiction.