New York’s top regulator Adrienne Harris is optimistic about a federal stablecoin deal, but not at the expense of state authority

While Congress continues to debate the future of cryptocurrency regulation, a state regulator is waiting for the federal government to catch up. New York’s Department of Financial Services established a comprehensive framework to oversee the wildcat industry in 2015, and now its superintendent, Adrienne Harris, wants to ensure that the DFS’s authority remains intact.

Speaking at Fortune’s Future of Finance conference in New York on Thursday, Harris said she supported legislation in Washington, particularly around the key stablecoin blockchain sector, though she also lobbied for bills aimed at maintaining a strong role for states like New York.

“Taking all of this away so the federal government can start from scratch would lead to real chaos in the industry, but it would also mean abandoning nearly a decade of experience and good work by DFS,” Harris said on stage.

Since DFS has introduced guidelines and licensing for stablecoins, including approval Last December, when the Paxos company released its products on the popular Solana blockchain, lawmakers in Washington blocked the passage of new legislation.

Although the House Financial Services Committee introduced a bill last July, it was largely driven by Republican members, with an agreement between Chairman Patrick McHenry (R-N.C.) and the incumbent member Maxine Waters (D-Calif.) long in the making. Protecting state control remains an issue divided between the two powerful lawmakers, with the White House reportedly pushing for a higher federal regulatory plan.

The debate has created atypical political alliances, with state regulators like Harris arguing to protect the state’s rights to regulate, and Democratic members of the New York delegation, including Rep. Ritchie Torres, breaking ranks with the party majority. In recent weeks, with Democrats and Republicans getting closer to an agreement in both the House and Senate, Harris has taken an active role Speaking of with other New York Democratic lawmakers, including Senate Majority Leader Chuck Schumer.

“We have a dual regulatory system where both federal and state regulators play a role,” Harris said Thursday. “It’s especially important in this case because New York knows how to do it very, very well.”

He added that he is optimistic that Democrats and Republicans will be able to reach an agreement thanks to the work of Schumer and other lawmakers. “I think we will see a deal come in the near future,” Harris said.

As DFS superintendent, Harris’ portfolio extends beyond cryptocurrencies to other industries such as insurance and banking, as of March 2023 when his department took over the failure Signature Bank. While sounding the alarm about the risks posed by banks’ exposure to commercial real estate, Harris said federal and state regulators are watching the sector closely. “I feel good about our banks,” he said.

However, he says Signature illustrates how mobile banking has facilitated faster withdrawals, with 20% of deposits leaving the institution in four hours. “We’ve never seen something like this before,” Harris added. “It’s time to update the way we think about liquidity and liquidity regulations, because technology has changed since the financial crisis, when those regulations were last looked at.”

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