New York to charge crypto companies for their supervision
(Kitco News) - Establishing a cryptocurrency company in New York may soon be even more of a challenge as the New York State Department of Financial Services (DFS) is proposing to have BitLicense holders pay for the costs associated with their supervision and examination.
Superintendent of Financial Services Adrienne A. Harris announced the new proposal via a press release, which noted that the proposal is now open for public comment.
“The proposed regulation effectuates a provision in the New York State FY23 Budget giving DFS new authority to collect supervisory costs from licensed virtual currency businesses, similar to other licensed financial institutions in the state,” the statement said. “These regulations will allow the Department to continue adding top talent to its virtual currency regulatory team.”
The statement claimed that the DFS is “the only entity in the world that has a robust, prudential regulatory framework specifically for virtual currency companies,” and said its regulation and guidance “provides transparent and timely rules to ensure the safety and soundness of the entities we regulate, protect consumers, and root out financial crimes like money laundering and terrorist financing.”
New York was the first state in the nation to adopt a regulatory framework for virtual currency companies with its 2015 Financial Services Law.
“Through licensing, supervision and enforcement, we hold companies to the highest standards in the world. This assessment authority will allow the Department to continue building the team that is leading the nation with a suite of regulatory tools,” said Superintendent Harris. “The ability to collect supervisory costs will help the Department continue protecting consumers and ensuring the safety and soundness of this industry.”
While participants in the crypto industry may feel like the fees are an undue burden, banking and insurance firms in the state have long been required to pay the costs associated with their supervision and regulation.
“At the time that DFS’s first-in-the-nation virtual currency regulation was adopted in 2015, the Financial Services Law did not include a provision for the assessment of operating costs, similar to Banking and Insurance Law,” the release said. “Entities licensed as a limited purpose trust company or a banking organization will continue to be assessed under 23 NYCRR Part 101.”
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The DFS has reportedly been working with “key stakeholders” and conducting in-depth research in the development of the new proposed virtual currency assessment regulation, which the release said will only apply “to entities licensed pursuant to 23 NYCRR Part 200.”
There is a 10-day preproposal comment period that began on Thursday, which will be followed by a 60-day comment period “upon publication in the State Register.” Once the comment period has concluded, the DFC will review all received comments and issue a revised proposal or a notice signaling the adoption of the final regulation.
No estimates were provided on how much BitLicense holders would have to pay if the regulation is passed. That figure will likely be determined by the department’s total operating expenses on oversight. Firms would also face penalties such as late fees, suspension or license termination if bills aren’t paid within 30 days.