New York Studying a State-Backed Cryptocurrency

Clyde Vanel, a New York lawmaker, submitted legislation in February calling for a task force to study the potential impact of a state-backed cryptocurrency. This is the latest of several blockchain-oriented bills that Vanel has submitted in recent months.

The proposed study would cover four areas: the “necessary steps” the state of New York would need to take to create and issue a cryptocurrency, and how Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC) regulations would affect it; how the cryptocurrency would affect state monetary policy and financial stability; how taxation at local, state, and federal levels would be impacted; and examples of other institutions that have issued cryptocurrency and the steps they took to do so.

Vanel’s interest in blockchain comes at a time when decisionmakers around the world are eager to apply its unique properties to a variety of uses. The four prior bills he introduced to the state senate reflect this diversity of purpose: the first adds definitions of “blockchain technology” and “smart contract” to state technology law, while also formalizing the legal use of digital signatures stored via blockchain; the second asks the New York board of elections to create a report evaluating the use of blockchain technology to improve the voting process, protect voter information, minimize voter fraud, and more-efficiently share election results; the third bill creates a task force to examine how blockchain could improve the storage and sharing of state government records; the fourth would form a similar group to gauge the impact of crypto on state financial markets.

Other New York lawmakers have taken up the subject as well. Senators Jesse Hamilton and David Carlucci held a roundtable discussion on February 23rd to “gain insight [into] the logistics and organization of cryptocurrency; its regulation through the BitLicense in the state of New York, other states and on a federal level; and the current marketplace in which it thrives and becomes problematic for consumers.” While no guarantees were made, consensus indicated that reform is needed for that regulatory legislation; Carlucci indicated a report will be prepared based on pain points introduced in the conversation and will include possible solutions “[that] can make this license in New York state something that works for the residents of New York state and the state economy."

New York politicians’ embrace of cryptocurrency and its underlying technology (or at the very least, their willingness to discuss it) has the potential to transform the state. It remains to be seen if discussion and studies can lead to concrete legislation, but the initial steps indicate an increasing acceptance of virtual currencies, blockchain, and a vision to use them to improve government and society.