June 08, 2022

Given New York’s unique role in global finance, the state always has top notch regulators and is normally at the forefront in addressing market change. It’s not surprising, then, that the state is focused today on the technology transformation underway in finance, including crypto.

My two guests today are both leaders at the New York state Department of Financial Services – DFS. Kaitlin Asrow is Executive Deputy Superintendent of Research and Innovation. Peter Marton is Deputy Superintendent of Virtual Currency. 

DFS established its innovation office several years ago, and new Superintendent Adrienne Harris is expanding it dramatically. To lead it, she turned to Kaitlin, who was previously with the Federal Reserve Bank of San Francisco and is renowned for her research and writing about privacy. To lead the agency’s work in crypto, they tapped Pete.

Our discussion is especially timely, because earlier today, DFS issued regulatory guidance for USD-backed stablecoins. The guidance covers requirements for backing, redeemability, reserves, and audit. The guidance is part of a larger DFS initiative digital currency initiative called VOLT (for Vision, Operations, Leadership and Technology).  

Pete and Kaitlin talk about the state’s unique positioning in the US regulatory ecosystem, especially for crypto. New York was the first state to create a license for virtual currency, called the BitLicense, which gives DFS holistic oversight of these firms. That scope contrasts with regulation at the federal level, where crypto oversight is structured around the functional domains of individual agencies, depending on what a firm’s activities are. For example, there is a lot of dynamism now regarding the respective roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) regarding what activities should be classified as securities versus commodities. In May, President Biden issued an executive order on digital assets and, notably, took an “all of government” approach that involves the many federal agencies that will play roles based on their various functions. In New York, in contrast, a single agency is looking at these highly varied entities from top to bottom. It makes DFS one of the most significant crypto regulators in the world. 

In our conversation, Kaitlin and Pete talk about what it takes to play that role, both in crypto and in their broader work with technology innovation. They explain how they keep up with the incredible velocity of change in this space. They talk about the tools in regulators’ tool box, and whether new ones may be needed. They talk about how they apply experiences from traditional banking oversight to these new challenges. And they talk about the challenge of regulatory agencies attracting talent, including in virtual assets, and how they are addressing it.  (Note that one key is that, unlike many other entities, they do allow their personnel to own crypto assets, within some limitations.)

They are hiring – see below for some of their job postings.

We also talk about the centrality of data and technology to regulatory work today. Last year, we at AIR had the pleasure of working with DFS, under the leadership of its original innovation head Matt Homer, to organize a TechSprint exploring the potential for adopting digital regulatory reporting (DRR).  The idea arose early in the pandemic, as regulators everywhere were scrambling for new ways to keep abreast of activity at the firms they oversee, since traditional onsite examinations were suddenly impossible. DFS realized that the easiest place to start would be with their BitLicense firms, which all have great technology and data. We at AIR are encouraging regulators to introduce DRR as they take on oversight of crypto. Think about it:  all crypto firms are tech firms. Their top executives are tech people. They have zero legacy technology left over from the analog age. They know how to change fast. Their entry into mainstream finance offers an ideal opportunity to create a new generation of regulatory reporting that is digitally native. It can give regulators more, better, and more frequent information, and can also capture efficiency gains for both government and industry. Over time, as the rest of the financial industry completes its digital journey, non-crypto firms should be able to opt in to the new reporting format. Ten years from now, we could have a vastly better regulatory system, building on this foundation.

A final note:  This is the first show we have done with a U.S. state regulatory body since the shocking news last month that my dear friend John Ryan had passed away. John was CEO of the Conference of State Bank Supervisors. We had him on the show twice, and I think he was the single most passionate, and most effective, advocate for America’s unusual “dual banking system,” in which we charter and oversee banks both in Washington and in each of the 50 state capitals. John argued eloquently that the states function as learning laboratories whose varied innovations benefit the country as a whole. The innovation and crypto work of DFS are prime examples of his point.

More on Kaitlin

Kaitlin Asrow is the Executive Deputy Superintendent of Research and Innovation at the New York Department of Financial Services. She is responsible for economic research, innovation policy, and virtual currency licensing and supervision. Prior to joining DFS, Kaitlin served as a Senior Policy Advisor within the Federal Reserve System specializing in fintech, data governance and management, data privacy, and artificial intelligence. She is a recognized leader in financial services innovation and policy design with experience in entity supervision and research design. Kaitlin has authored multiple papers and books on data policy, including an evaluation of data protection and data rights in the United States, and a review of Open Banking. Kaitlin received her Master of Public Policy from the University of Chicago and her BA from Stanford University.

More on Pete

Peter Marton is the Deputy Superintendent of Virtual Currency at the New York Department of Financial Services. He is responsible for the Virtual Currency Unit, which oversees day-to-day supervision, onsite examination, and applications related to DFS-regulated virtual currency entities. Peter received his Master of Global Policy Studies and Master of Business Administration from the University of Texas at Austin and his BA from Bowdoin College.

More for our Listeners

The shows have been absolutely great lately, I hope you agree! Up next, we have Sigal Mandelker of Ribbit Capital; Sunayna Tuteja, the first-ever chief innovation officer of the Federal Reserve System; Randall Quarles, the recently departed Vice Chair of the Federal Reserve Board; and Circle CEO Jeremy Allaire.

Please also come to to learn more about our upcoming global TechSprint on anti-corruption. It is called ASET –  Anticorruption Solutions through Emerging Technologies – and is being hosted by us with the U.S. Departments of State and Treasury. Learn more here!

There are a lot of great conferences coming up! Make sure to join the ABA Regulatory Compliance Conference this month for my keynote on what the compliance profession is going to look like in 2032. I’ll also be back at the RegPac RegTech Innovation Summit this month. I hope to see many of you in Zurich this month at the Point Zero Forum, a unique gathering hosted by the Swiss government and Elevandi, a nonprofit entity created by the Monetary Authority of Singapore (MAS) (I serve on Elevandi’s board.) 

I’m also excited to be speaking in August in Aspen at the really interesting Moonclave conference, which will be tackling all the big issues emerging in crypto. And next weekend, I’ll be in Austin at the enormous Consensus conference hosted by Coindesk.

In September I’ll be back at And we’ll of course be at Money 20/20 in the fall.

Don’t forget to follow AIR on LinkedIn and Twitter. Be sure to leave us a five-star rating on your favorite podcast platform. And please follow me personally on Twitter @JoAnnBarefoot.

Get involved

Stay informed by joining our mailing list