New York Cryptocurrency Task Force
Recently, we discussed the basics of BitLicense, the credential required by New York State for cryptocurrency-based businesses. New York has also introduced another measure to impact cryptocurrency business and transactions in NY and throughout the country. Specifically, Governor Andrew Cuomo has assembled a New York Cryptocurrency Task Force”. Its goal is to study, discuss and contribute to the proper regulation of the blockchain industry and cryptocurrency. First announced in January, 2019, this NY cryptocurrency task force has immediately drawn criticism from outside observers. The main point of criticism has to do with the corporate affiliations of some of its members. In this post, we will take a closer look at the NY task force and discuss its significance.
Basics of the New York Crypto Task Force
The cryptocurrency task force of New York is intended to serve several functions. For instance, the digital currency task force was created to counsel the State of New York on how to properly regulate, define and use cryptocurrency and related technologies. Toward these ends, NY selected a mix of cryptocurrency corporate actors and financial services experts. The unit will be total 13 members. The first of its kind, this organized task force may end up influencing the cryptocurrency policies of other states and even foreign governments. Because of its importance, Governor Cuomo must approve the six members who have been selected to join the unit. The governor selects the remaining seven members, himself.
Task Force First Announced in January 2019
The cryptocurrency task force of New York was first announced back in January, 2019 by the New York State legislature. This task force – officially referred to as the Digital Currency Taskforce – will prepare official reports on the cryptocurrency space by December 15, 2020. A good way to think of this force is to liken it to a government-sponsored think tank. The selected (and Governor-approved) task force of experts will come together to discuss the best ways to regulate, understand and use cryptocurrency, blockchain technology and other related technologies. For instance, the unit will discuss the energy requirements associated with so-called cryptocurrency “mining.” The unit will also discuss how cryptocurrency has affected the tax collection practices of the IRS and the New York State Department of Taxation and Finance. It will also seek out best practices for protecting New York investors.
Six Corporate Members Selected in July
In July, 2019, New York Assembly Member Clyde Vanel, announced the selection of six members for the task force. These six members were some of the most prominent players in the digital, cryptocurrency, and economic, corporate space. The members selected were as follows: Joseph Lubin, founder of ConsenSys; Sandra Ro, CEO of Global Blockchain Business Council; Yaya Fanusie, an adjunct fellow at the Defense of Democracies foundation; York Rhodes, a co-founder of Blockchain at Microsoft; Ryan Zagone, a regulatory director at Ripple; and Aaron Wright, a law professor at the Cardozo School of Law at Yeshiva University. Selection of these individuals was made in a video available on YouTube.
Criticisms of the NY Crypto Task Force
Although there are still seven other members to add, the initial selections are already drawing a fair bit of criticism from observers. The reason for the criticism has to do with the background of the members. Given the corporate backgrounds of certain members, some have complained that the advice given by the unit will be skewed in favor of the organized cryptocurrency business community. We may see a digital currency study bill, for instance, which argues in favor of overly gentle treatment of the already robust blockchain industry. We may also see advocacy for tax laws and policy favoring investors and cryptocurrency businesses.
A Call For Independent Advisors
As one example, Preston Byrne, an attorney which focuses his practice on cryptocurrency issues, suggested that the selection of independent advisors would’ve been a better approach. Still, the unit has a law professor, a member from a non-corporate foundation, and seven other members to add. There is still room strike a balance in its membership. After all, the unit should have at least a few corporate actors in order to provide some voice for the business community.
Reach Out to MC&C for Additional Information
We will come back and study this task force in more detail in the future. There’s still seven members to name to the task force. Governor Cuomo will take the role of selecting and approving these additional members. We’ve seen more and more IRS activity related to cryptocurrency, as well as greater New York State activity. In the future, we may see specialized laws come into place as the United States Congress becomes involved. Whatever happens, the attorneys at Mackay, Caswell & Callahan, P.C., will be on top of new developments. We’ve kept up-to-date with most of the new developments and issues in the cryptocurrency space. We’ll continue to do so in the future. For more information, contact one of our top New York City tax attorneys today.