In order to be able to charge licensed crypto firms for regulating them, the New York State Department of Financial Services (DFS) has presented a proposal for changing state legislation.
Although it may seem strange, the DFS frequently charges regulated non-crypto financial organisations for the costs and expenses of keeping watch over them in accordance with Financial Services Law (FSL).
The initiative is being led by DFS Superintendent Adrienne Harris, who made the announcement via the DFS website on December 1 and has since made it available for public comment for the next ten days.
As 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 into line with other regulated financial institutions in the state.
According to Harris, new rules will enable the Department to keep bolstering its virtual currency regulatory team with excellent personnel. He said that they hold businesses to the greatest standards in the world through licencing, oversight, and enforcement. He added that the Department will be able to continue protecting consumers and maintaining the safety and soundness of this industry with the power to collect supervisory expenses.
In accordance with the proposal paper, the DFS would assess fees based on the overall operating costs of supervising licensees and the “proportion deemed just and reasonable” for additional operating and overhead costs.
As a result, there is no standard amount that all businesses must pay because the amount of oversight varies. Instead, the total amount due would be divided into five payment periods over the course of the fiscal year.
It is not unexpected that regulators are rushing to impose more regulatory monitoring after the crypto business had yet another multi-billion dollar meltdown, this time as a result of the now-bankrupt FTX, Alameda Research, and Sam Bankman-Fried.
The chairman of the United States Commodity Futures Trading Commission, Rostin Behnam, stated that the regulations of his agency contain “core elements that have served the markets for decades” on December 1. However, Behnam and the senators agreed that significant gaps in the existing legislation have emerged as the consequences from the FTX collapse are being resolved.
On the other hand, Christy Goldsmith Romero, the commissioner of the Commodity Futures Trading Commission (CFTC) feels that current regulations are enough and more efficiency is required. Romero argues that an average cryptocurrency investor should be provided different forms of safety from professional and high-net-worth persons. She suggested that the CFTC should divide retail customers into two groups in order to provide each category with additional protections.