NYDFS begins charging crypto firms under the watch of the regulator
The New York State Department of Financial Services (NYDFS) said it will begin billing cryptocurrency entities registered with the state in exchange for annual examination and oversight.
Superintendent Adrienne Harris explained that the fees will be different for each organization, depending on size and complexity.
Bringing crypto closer to the banks
NYDFS tired the new rule will apply to those devices that have already obtained the so-called bit license. The financial regulator adopted the regulatory regime in 2015, requiring crypto businesses to meet various standards for capitalization, anti-money laundering protocols and cybersecurity protections.
Each firm will pay fees five times per fiscal year (four estimated quarterly settlements and one based on actual expenses). The legislation coincides with the beginning (April 1) and end (March 31) of New York’s budget year.
The change aims to align the cryptocurrency sector more closely with banking institutions and insurance companies since they are obligated to pay annual fees to the NYDFS in exchange for oversight. Superintendent Harris believes the local digital asset sector can gain many benefits from working with the watchdog:
“When you can work hand-in-hand with your regulator and your investigators, we can help identify problems early before they metastasize, and that’s really a service we can provide to the industry, and it helps us as regulators better monitor marketers and protect consumers.”
Eric Soufer – a manager at the consulting firm Tusk Strategies – praised the NYDFS for its approach to the crypto field, claiming that it is among the few who recognize the necessity of relevant regulations in the space:
“I think the industry recognizes that New York is the only state that regulates crypto in a comprehensive and proactive way.”
NYDFS’ previous guidance
The regulator earlier encouraged companies operating in the state to separate customers’ cryptocurrency holdings from their own assets since commingling could result in a serious financial loss. They should also release records and keep a “clear internal audit trail” to notify customers of transactions involving their funds.
The NYDFS outlined the growing interest in digital assets in recent years, and believed that the market must operate under a comprehensive regulatory framework:
“As custodians of other people’s assets, virtual currency entities (VCEs) acting as custodians play an important role in the financial system, and therefore a comprehensive and safe regulatory framework is essential to protect customers and preserve confidence.”
