The New York State Department of Financial Services (DFS) has presented a proposal to amend state legislation and charge licensed cryptocurrency companies for regulating them. Although it may seem strange, the DFS frequently charges its regulated non-crypto financial organizations for the costs and expenses of keeping watch over them under the Financial Services Law (FSL).
The initiative is being led by DFS Superintendent Adrienne Harris, who made the announcement via the DFS website on 1 December. The proposal is available for public comment for the next ten days.
As the FSL did not include a provision for crypto enterprises when crypto regulation was enacted in New York in 2015, Harris is essentially aiming to bring virtual currency businesses in line with the state’s traditional financial institutions.
What does the law bring to the table?
Harris noted that the extra funds would enable the organization to expand its crypto team,
“Through licensing, supervision, and enforcement, we hold companies to the highest standards in the world. The ability to collect supervisory costs will help the Department continue protecting consumers and ensuring the safety and soundness of this industry.”
The assessments will only apply to cryptocurrency businesses with a BitLicense, a unique business license provided by NYDFS that enables enterprises to operate in New York. A BitLicense, which is notoriously tough to obtain, is held by just 22 companies, and just three have been given this year.
The need for more crypto regulations
It is not unexpected that regulators are rushing to impose more crypto regulations after the crypto business had yet another multi-billion-dollar meltdown, this time because of the now-bankrupt FTX, Alameda Research, and former golden boy Sam Bankman-Fried.
The 10-day pre-proposal comment period will begin on Thursday with the publishing of the draft rule, and a 60-day consultation period will follow the draft regulation published in the State Register. Following the comment period, the NYDFS will either publish a notice of the adoption of the regulation as it is now written or release a revised proposal.