There is legislation moving through the state of New York that shifts some responsibility regarding online lending to the New York Department of Financial Services (NYDFS). [S07294 and A8938]
Originally, there was a bill that was signed into law on December 29, 2017, by Governor Andrew Cuomo, that created a task force to analyze online lending activity in the state of New York. The new legislation will eliminate the task force and migrate the responsibility to NYDFS.
This is according to a brief write up in Lexology and the change in approach may have an important impact regarding online lenders operating in the state of New York.
NYDFS does not necessarily have a reputation for being Fintech nor innovation friendly. In fact, the NYDFS sued the Office of the Comptroller of the Currency (OCC) targeting the Fintech Charter concept.
In 2016, the NYDFS sent a letter to a squadron of online lenders demanding “immediate compliance with New York licensing requirements for debt collection, money transmission and mortgage lending activities,” as reported by Reuters. Recipients of the letter included Prosper, Avant, Funding Circle, Upstart and more. Please note, these platforms are not necessarily based in New York state but certainly provide lending options to the state’s citizens.
NYDFS has also targeted some cryptocurrency operations.
Should online lenders be concerned? Uncertain, but one would expect their lobbyists to be watching this one closely.