When I Systemically Important Social Media Institutions (SISMIs) were the social media parallel to Systemically Important Financial Institutions (), I did not expect the theory to be picked up by financial regulators.
As it turns out, the New York Department of Financial Services (NYDFS) essentially agrees with the argument, as seen by its investigation into the recent Twitter hacks. In the the department recommended creating a “systemically important” designation for large social media companies, like the designation for critically important bank and non-bank financial institutions.
If you’re wondering why the New York’s financial services regulator was to conduct an investigation into the hack of a California-based social media platform, recall that NYDFS licenses Coinbase, Gemini and Square – all companies affected by the Twitter hack that resulted in losses of approximately $22,000 worth of by their customers.
Considering the complex web that binds social media companies with financial companies, the economy, markets and , it ultimately wasn’t all that surprising to see a state regulator thrown into the mix. Even Gov. Andrew M. Cuomo , “This type of hack by con artists for financial gain can also be a tool of foreign actors and others to spread disinformation and – as we’ve witnessed – disrupt our elections.”