Professional Documents
Culture Documents
was born and raised, but because Brooklyn represents the diversity of
innovation that we are here to talk about today. We have a full agenda
how state regulators are ahead of the curve on promoting innovation while
protecting the integrity of our markets and consumers at the same time.
for us to have this nationwide discussion here in the State of New York,
where banking regulation began and where innovation thrives. New York
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has a very proud and stable banking history, but many of you might not
know that New York’s banking industry actually grew and prospered out
of national instability. Those of us who are history buffs may know that
our nation’s founders were famously in disaccord over the nature and type
the Bank of New York in June 1784 – which remains a New York state
federalism compromise, but the debate was a continuing one for some
time. Indeed, over the course of early American history there were many
and each such effort was met with resistance by the states. It also is a
truth that each response by the states strengthened the foundations of our
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services that ultimately led to the strong and vibrant state banking system
we know today.
strength enabled the state, and ultimately the nation, to weather many of
the world's most severe financial crises. In 1838, New York enacted its
Banking Law and by 1860 some 18 states had enacted their own version
But even with these innovations in their column, state banks were
not immune from attack. By the time of the Civil War, President Abraham
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Subsequently, the federal government tried again to impede state
time, this caused many state banks to be unable to compete with federal
banks was equal at 3,807 each.1 And, today, due to continuing state
This resilience by the states, this courage to innovate, and this desire
products, flows through the blood of our New York state chartered and
licensed institutions, and those of the many states who are present at this
forum today.
1 “Dual Banking System Has Stood Test of Time”, Abernathy, Wayne A., American Banker,
was then – and still is now -- to ensure that operations are carried out
have been expanded over time and today include holding sufficient
bond that protects against certain losses. Like all banks and licensed
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ensure that they meet standards and improve operations, while serving
Fund, paid into through assessments on all New York licensed money
2013, long before it was on the radar for most of the financial services
world. At the time, Bitcoin was fluctuating around $100. One concern
DFS had at the time was that startups - like the Mt. Gox exchange
was that these then unregulated small businesses were not respecting
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anti-money laundering laws. DFS recognized early on that standards
needed to be set that would help improve operations and safety, and we
therefore created a channel for growing in the right way: respecting legal
2015.
Companies that have since received licenses from DFS include the
Japan. Virtual currency remains a novel and far from stable area of
spurred innovation. And DFS and the states have helped set the
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that customer protection is taken seriously, and cybersecurity and AML
services that seem cheap or convenient turn out to hide fatal flaws -
flaws like those that led to hacking, massive losses, and eventually the
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At DFS we are stewards of New York’s status as the financial
capital of the world, as well as its status as the place where the state
thrive at the same time. Our work on “fintech” reflects our support for
conducting the same types of activities complies with the same rules.
sector. Fintech can refer to myriad products, like APPs, software, and
check - that’s fintech, used by your local bank. Certain kinds of fintech
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provided that the underwriting is done with regard for risk and consumer
framework that has been in existence for a very long time. The use of
financial technology alone should not grant one an exemption from the
rules that banks and other financial institutions follow to manage risk and
protect consumers. Our state chartered community banks are serving New
We have a robust agenda ahead of us, with panel discussions from various
business sectors and standpoints. We want all of the issues put on the
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end of the day, we will have learned something from each other, and that
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