Ben Lawksy, the author of New York's controversial BitLicense bill and the New York Superintendent of Financial Services, has warned of a possible “cyber 9/11” type attack against US banking.
Lawksy made the comments whilst addressing the Columbia Law School on 25 Feburary. Imagining an “Armageddon-type” attack against American financial services, Lawsky predicts the effects could be worse than the 2008 financial crisis which was caused by failing mortgage products.
The lawmaker’s suggested solution is closer regulation of bank security, and greater scrutiny of their in-house anti-money laundering controls.
The new proposal has already drawn criticism from the finance and bitcoin communities. Speaking to Cointelegraph, David Mondrus, founder at The Blockchain Factory and The Bitcoin Association, explained the following:
“Banks already work closely with the federal government on security, threat analysis, detection, and remediation and standards. The recent breaches of JPMC and others were conducted by country level actors. Lawsky's new proposal for state level regulation would do nothing to counter this threat.”
Lawksy also used the speech to draw links between moving money internationally and terrorism. "Money is the oxygen feeding the fire that is terrorism. Without moving massive amounts of money around the globe, international terrorism cannot thrive."
“Right now, it feels as if the major advantage they’re providing is anonymity. We’ve learned over the years that if you see huge international transactions over the Internet, anonymous, it can often become a haven for money launderers, terrorists.”
At an official level however, New York's Department of Financial Services has still not publicly released the “extensive research and analysis” claimed to have been carried out as to why Bitcoin needs the special regulation forming the BitLicense proposal.
Lawsky's latest statement appears to be reacting to the recent news of a string of hacking attacks against major international banks that security researchers claim has cost a minimum of US$300 million. By increasing the regulation around financial services, the Financial Superintendent may be hoping to find protection from his feared financial cyber-attack.
Mondrus however offers another perspective of the possible motivations behind the move.
“It is simply another regulatory land grab.[... It] is a great example of how government compulsion is veneered as a "market based solution" when it is nothing of the sort.”
Despite his grand plans, Lawsky's term in office appears limited, with rumors circulating that he will be stepping down in early 2015 as part of a government reshuffle. Whether his spell in office will be long.enough to see his regulations enacted is unclear.
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