For 44 year old Benjamin Lawsky, overseeing New York’s banking sector from a regulatory perspective has been a task which he has so far taken far beyond the traditional boundaries.
The futuristic approach taken by Mr. Lawsky, however, may be set to come to an end soon, as he considers standing down from his position as Superintendent of the recently created New York Department of Financial Services.
Having been recruited to the position in 2011 by Governor Andrew Cuomo, Mr. Lawsky was provided with a mandate to regulate state-licensed banks and has been instrumental in stiffening penalties against some of the world’s largest financial institutions, however he has also showed some less conservative traits, including the instigation of the first regulatory framework for Bitcoin in North America, with the announcement this year of the BitLicense.
The new rulings were set in place in July this year with Mr. Lawsky’s full approval, with requirements including ensuring that all companies hold the entire amount of any denomination of virtual currency owed to a third party, and must keep receipts of all transactions.
The rules also impose strict demands on license holders to report any occurrences of fraud or anything that could be deemed illicit activity within 24 hours. One particular North American law enforcement agency, the US Marshal Office, hinted in the direction of legitimizing Bitcoin last month with its auction of 30,000 Bitcoins that had been seized from illicit traders, and could be purchased directly from the US Department of Justice by members of the public.
Mr. Lawsky followed this remarkable step up in October this year by stating that only actual dealers will require the license, and that he gives Bitcoin technology developers a free remit to go ahead and forge new technology.
It is his view that Bitcoin technology developers are free to conduct their business without a license, whereas banks and dealers will require regulation. With technological development at the heart of Bitcoin’s future, New York’s acceptance as a mainstream activity could lead to rapid growth and investment.
According to a report by Bloomberg, Mr. Cuomo has not yet decided on who will fill the position after Mr. Lawsky resigns. Mr. Cuomo combined New York’s bank regulatory department and its insurance division to create DFS in the aftermath of the financial crisis, forming a new state regulator that could monitor hybrid products marketed by all kinds of financial institutions.
“He loves his job and is very busy doing it to the best of his ability each day,” said Matthew Anderson, a spokesman for Mr. Lawsky. “He hasn’t decided on his plans for the future.”
One of the more high profile measures which has marked out Mr. Lawsky’s tenure within the New York State’s Financial Services department occurred in August 2012, when Mr. Lawsky issued a public letter outlining the scope of Standard Chartered’s problematic transactions and demanding to know why he shouldn’t revoke its license.
Subsequently, senior legal officials at the Manhattan District Attorney’s office, the Federal Reserve, the Treasury and Justice Departments expressed extreme disdain over Mr. Lawsky’s action, as they saw it as an upstaging of their professional abilities by Mr. Lawsky, which embarrassed them, according to people briefed on the matter at the time.
London-based Standard Chartered settled with Mr. Lawsky that month for $340 million and agreed to employ a monitor, and the other regulators wound up with a smaller settlement to the tune of $327 million, four months later.
Mr. Lawsky was also behind the partial suspension of Paris-based BNP Paribas (BNP) SA’s dollar-clearing operations in New York and an agreement not to employ 13 key executives as part of its $8.97 billion settlement for sanctions violations in June.