New York State Department Of Financial Services Taps Enforcement Attorney To Lead Research And Innovation Division

Is the New York State Department of Finance (DFS) gearing up for enforcement actions in the crypto space? 

In the last couple of months, Debra Brookes was quietly installed in the newly created position of Deputy Virtual Currency Chief in the DFS Research and Innovation Division. Before joining the DFS more than eight years ago, Brookes was a federal prosecutor who led and participated in complex white-collar investigations which, according to her LinkedIn profile, resulted in over 70 guilty individual and corporate guilty pleas and millions of dollars in fines and restitution. 

Prior to assuming her role in the Research and Innovation Division, Brookes held leadership positions in three different DFS divisions, each of which possessing enforcement and investigatory authority: Financial Frauds and Consumer Protection Division, Enforcement Division, and Consumer Protection and Financial Enforcement Division.

DFS is the primary regulator for all state-licensed and state-chartered banks, credit unions, and mortgage bankers and brokers.The Department also oversees all the money transmitters, and virtual currency businesses operating in New York.

In 2015, the DFS implemented the restrictive BitLicense, which sent innovators in the FinTech space scurrying from the State. Since that time, DFS has sought to lure them back with inviting rhetoric and innovative initiatives. 

Last summer, the DFS enacted the Conditional BitLicense to enable virtual currency companies to do business in New York with fewer obstacles and less expense. This past October, PayPal PYPL became the first entity to receive the Conditional BitLicense.


At that time, DFS Superintendent Linda A. Lacewell said that “DFS will continue to encourage and support financial service providers to operate, grow, remain and expand in New York and work with innovators to enable them to  germinate and test their ideas, for a dynamic and forward looking financial services sector . . . .”

As of this writing, the number of crypto companies overseen by the DFS that operate in the State has swelled to 30.

Does having a career enforcement regulator helming the DFS Research and Innovation Division suggest that the DFS may be seeking investigations over innovations. Perhaps, but perhaps not. After all, Valerie Szczepanik who leads the Securities and Exchange Commission’s Strategic Hub for Innovation and Financial Technology came from a background in enforcement, and she’s been an outspoken and active participant in the crypto space, inviting companies to share their technology and vision, and offering guidance to ensure compliance. 

So, the jury’s out on this one. Only time will tell. Fingers crossed.


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