Dive Brief:

• New York will convene a task force on how to “properly regulate, define and use cryptocurrency,” according to a Facebook post by state Assemblyman Clyde Vanel. Vanel authored the bill creating the task force, which was signed by Gov. Andrew Cuomo last week.
• The task force will include technologists, consumers, investors and academics appointed by the Governor, state Senate and Assembly. The task force will submit a report by Dec. 15, 2020 that will cover topics including how the technology can be used in government functions, cryptocurrencies’ impact on tax receipts and potential regulations on the marketplace.
• New York was one of the first states to regulate cryptocurrency with a licensing requirement known as BitLicense introduced in 2014. Vanel said the task force will respond to rapid changes in the technology, where "a few months is equivalent to years."

Dive Insight:

Cities and states are struggling to keep up with the boom in cryptocurrency, both as a regulatory matter and to embrace the decentralized economy as a new way of doing business. Blockchain will allow consumers and businesses to conduct transactions without middlemen like banks. Already smart cities are exploring potential applications, like using blockchain for microgrids, transportation and contracts, where two parties could put contract details into blockchain metadata for easier record-keeping and more secure storage. Cryptocurrency company Blockchains LLC has even announced plans to build an entirely blockchain-backed city in Nevada.

Such uses also bring concerns about security and transparency. New York instituted BitLicense in response to concerns about hacks and people losing their currency, which eventually became a model for other states to ensure cryptocurrency security. Though governments are still working on how to regulate the industry; California has also explored its own task force and states and cities will no doubt be watching what New York comes up with.

Given New York’s status as a global financial hub, the government has tried to stay ahead of the evolving technology. New York City last spring announced a physical blockchain center to foster new applications of cryptocurrency. In a statement, Tech:NYC executive director Julie Samuels said the state’s task force "shows how our state is leading the way in studying and understanding these technologies to ensure they can thrive in a responsible and effective way, further solidifying New York’s position as a global hub for smart innovation."