New York State Comptroller Questions DFS's Oversight of BitLicense Program

According to CoinDesk, a review by New York State Comptroller Thomas DiNapoli has raised concerns over the New York Department of Financial Services' (DFS) oversight of crypto activity through its BitLicense program. The audit report found that the regulator relied on outdated, incomplete, and sometimes missing data on the backgrounds of virtual currency license holders when considering their applications. The report recommended that DFS improve its application review process and ensure timely examinations. However, the DFS responded that the issues outlined in the draft version of the report predate the agency's current leadership and have been addressed. The audit began in April 2022 and extended through much of 2023. The DFS argued that the comptroller's lack of confidence in its oversight does not accurately reflect the agency's work to address historical issues and is not supported by the findings or recommendations. The report accused the DFS of falling short in several areas, including missing fingerprint information, unavailable background on applicants' tax obligations, long lags between risk assessments on applicants and their eventual approvals, missing financial information, and insufficient cybersecurity compliance from BitLicensees. The New York State Attorney General's Office has also questioned whether the state's financial watchdog is adequately overseeing the crypto industry. The NYAG sued a BitLicense recipient and lobbied for legislation giving it greater oversight in the past year.