“Toddlers play in a sandbox; adults play by the rules.” So says Superintendent Maria T. Vullo who oversees New York’s Department of Financial Services which has a somewhat similar role to UK’s FCA or Japan’s FSS.
“Preposterous,” she called in a very adult manner the recommendation by a Treasury report to utilize regulatory sandboxes.
Vullo further thought it her business to criticize the Office of the Comptroller of the Currency for launching the fintech charter. Throwing a fit is indeed what adults do when they don’t get their way.
“New York has become a crypto backwater in a lot of ways, and not because it takes long to approve licensing applications—it always takes long to approve licensing applications—but because the way that the BitLicense was drafted.”
So says the toddler, Marco Santori, advisor to the International Monetary Fund and chief legal officer of Blockchain, the company.
“Companies that truly want to create change and thrive over the long-term appreciate the importance of developing their ideas and protecting their customers within a strong state regulatory framework,” argues Vullo.
A sandbox, however, doesn’t mean no rules or no regulations. To the contrary, sandboxes are frameworks overseen by regulators who find first hand what are the challenges of innovative companies or projects – traditional companies like Barclays and others have participated in sandboxes.
This innovative regulatory approach allows adults, like Vullo, to see what regulation works well, what regulation doesn’t work, and perhaps to see what is not regulated, but maybe should be.
That Vullo is seemingly suggesting she is unaware of all this and the fact she is willing to criticize the Treasury as well as OCC when arguably it is none of her business, might perhaps indicate that this has little to do with sandboxes and more to do with protecting the banking industry which is primarily clustered in New York.
That might explain why the adult has given permission to only five toddlers through the super serious BitLicense “regulatory framework.”
The five toddlers that have now graduated into adulthood are Circle, which received its BitLicense in 2015; XRP II, a Ripple subsidiary, in 2016; and Coinbase and bitFlyer in 2017.
Not one crypto business in a market of some $250 billion (nearly a trillion dollars at its height) cared to receive a BitLicense for the past eight months of 2018. Yet she calls us the toddlers.
Then let us be children and at least earn the insult that has been given by telling the story of how New York went bankrupt and bankers took over the running of the state, giving orders to people like Vullo, at least for some years.
The confident 60s gave way to a 70s recession. Coupled with the alleged use of non-traditional accounting practices, New York suddenly faced itself at the brink of bankruptcy in October 1976.
Bankers refused to market the state debt. President Gerald Ford, who only served for about one year and saw two assassination attempts during that period, refused to aid New York.
The ferocity of a speech he gave at the time led to the now famous headline we have borrowed for this article. Ford to City: Drop Dead.
In a time of crisis, “many things can be done even if they are technically not possible,” said in the midst of it all Jac Friedgut, a vice president at First National City Bank.
They established a Financial Control Board. “A corporate and financial elite, along with technocratic politicians responsive to that group, gained control over New York,” says the New Republic.
“They saw the control board as the end of home rule, as the end of self-government,” according to New York Times. They further add:
“‘In a way,’ said Mayor Koch, who was a member of Congress when the control board was created, ‘the city of New York was like an indentured servant. The city, in order to survive bankruptcy and to get Federal assistance, indentured itself, and the letters of indenture, figuratively, will be burned on the day the sunset takes place.’
‘There arises, for the first time in its history, the possibility that New York will no longer be a place where talented young people want, or can afford, to go – becoming instead the world’s largest gated community: incalculably wealthy, sterile, and dull.'”
Those ignorant of history are doomed to repeat it. Making this tale a great warning to this generation for we face a situation where governments across the west are deep in debt. The consequences, for New York, were severe.
“In the years to come, what had taken progressive politicians, labor unions and citizen activists generations to build — a working-class city with a sense of common public life — would be refashioned into the two New Yorks of today, one of breathtaking wealth, the other of searing poverty. To many liberals, it’s been an unfortunate trajectory; to some, a tragic one. But was it inevitable?” Asks the New York Times.
“The political impact of the fiscal crisis was felt far beyond conservative circles. The crisis brought about a transformation of the very language and conception of politics, as the rhetoric of fiscal necessity and business acumen replaced a vision of politics as a domain of struggle and negotiation.” So says The Nation.
It is, in many ways, a sad story, and in many other ways it is uplifting too for New York recovered and then went to roar in the 90s.
Yet what happened there continues to affect what happens today, with an added twist of the banking crash in 2008.
The adults, whom Vullo supervises, turned out to be very much children, and of a very selfish kind. The superintendent and her ilk did nothing prior to the banking crisis, and did nothing after it. Leaving the matter to the best of this generation who now offer a real alternative.
A generation which sees clearly that those who claim to be adults are in fact some of the biggest toddlers around, starting with Sherif Clayton who enforces discriminatory investment prohibition laws that reserve the best opportunities only for the rich.
To call us children would have only been deserved if we had called Vullo and Clayton mere puppets, but perhaps we understand just how important the task is at hand to devolve into petty insults which these adults seems to so much prefer.
Because competition in the banking sector is of vital importance, and governments of the world realize that by the day, as does now the civil service of America. Yet luddites will always be around.