In recent times, the regulatory environment for cryptocurrencies in the United States has been intensifying, sending a strong message to the industry. Adding to the situation is the New York state regulator which is going to take a strong step against the crypto firms.
On Monday, the New York Department of Financial Services (NYDFS), said that it will impose supervision charges on crypto firms. Adrienne Harris, NYDFS Superintendent of Financial Services, said that the agency is introducing a regulation giving it the powers and amenities required to regulate the digital assets sector. Quoting her:
This regulation provides the Department with additional tools and resources to regulate the virtual currency industry now … as innovators create new products and use cases for digital assets.
According to the announcement, the new regulation will allow the regulator to collect supervisory costs from virtual companies licensed under the state’s BitLicense. A BitLicense regulates businesses operating with digital currencies, such as virtual currency control, administration, maintenance, storing, holding, issuing, exchange operations, related-software development, etc.
Sources reveal that Harris suggested that fees will not be constant and rather be determined by factors like the complexity and size of the relevant crypto firm. Additionally, companies will be billed five times per fiscal year.
Notably, licensed companies in other areas of the financial sector, for example, those functioning in the banking and insurance sectors, already pay the same costs to the NYDFS.
Harris said that this change in policy would allow companies to work more closely with the regulator through supervision and examination. She also counts on this new rule to be helpful for companies in detecting issues sooner and will provide protection to consumers. Quoting Harris:
When you can work hand-in-hand with your regulator and your examiners, we can help identify issues early before they metastasize, and it really is a service that we can provide to the industry and it helps us as regulators better oversee the markets and protect consumers.
The regulator says that the additional revenue gained from the fees will also allow the NYDFS to hire more staff. While the regulator adopted the new rule on Monday, the idea was first proposed in December as reported by Todayq News.
However, despite the regulator’s efforts to count the recent move in a positive light, the state has been widely renowned for its strict regulations around cryptocurrency. To date, about 33 companies have obtained a New York virtual currency license also known as Bitlicense. The licensing requirements, modeled after its banking supervision requirements, ask crypto businesses to meet certain standards for capitalization, cybersecurity protection, and anti-money-laundering protocols, among others.
Not just the strict policies, the regulator has also extended regulatory actions against firms. In January, the NYDFS settled with Coinbase for $100 million over its insufficient AML requirements.
Simultaneously, the New York Attorney General’s office has recently filed charges against crypto companies that are not registered with the state, including CoinEx and KuCoin. Notably, additional fees, such as these supervision charges, could discourage companies with fewer resources from attempting to operate in the state.