The state of New York has always been a headache for cryptocurrency exchanges as their ever-tightening regulations have forced out Kraken. Their demands for information and investor protections,although are in the right spirit, may be too burdensome for Cryptocurrency Exchanges to operate there. They have three main points. One is that ICOs be more regulated to protect people from “take the money and run” scams. This one I actually agree with as many ICOs just are empty shells that wait to trick investors out of money and then run. These needs to be investigated and shut down. The second is improved security and insurance for exchange funds so exchanges don’t get hacked, resulting in lost funds for investors. This one I also agree with because if your exchange gets hacked and funds are stolen, you should be completely liable for the stolen funds because your security system was not good enough.
The third one of preventing what they call “unfair market practices” is the tough one. That basically means you have to limit whales on selling large amounts to control the price of the market. I don’t actually believe movements by whales that own a lot of coins is the reason for these market drops, I believe short sellers on CBOE and especially Bitmex are the main people manipulating the market. Remember for futures markets, you don’t actually have to own any Bitcoin to effect the price of the market, especially since contracts are settled in cash and not Bitcoin. Secondly, there’s a massive OTC market for Bitcoin which will effect price and there’s no way you can control that. And third, whales can sell their Bitcoin across many exchanges and no one exchange can control whales pumping and dumping. This “unfair market practices” line I think is most abused by institutions themselves taking huge short or long positions(I believe that “fake news” regarding Goldman Sachs was generated by Goldman itself) and it would be really hard or impossible to restrict large holders from selling lots of coins at once, because they can go through any exchange. So, I believe the third rule is an unreasonable demand.