The New York State Department of Financial Services (NYDFS) has announced that it will be adopting a new regulation that will allow the government agency to assess supervisory costs from licensed crypto firms operating within the state. The supervisory costs collected through this regulation will be used to add top talent to the NYDFS’s virtual currency team. This move by the NYDFS is seen as an attempt to improve its oversight and regulatory capabilities in the rapidly-evolving digital asset industry.
According to the NYDFS, the regulation will allow it to assess the costs associated with the supervision and examination of crypto firms operating in the state with a BitLicense. The Department hopes that these new tools and resources will enable it to better regulate the virtual currency industry in New York, both now and in the future, as innovators continue to create new products and use cases for digital assets.
The new regulation was proposed in December 2022, after which the NYDFS met with key stakeholders and received feedback. The regulator noted that the proposed rule was added in response to the state’s Financial Services Law not including such a provision on the assessment of operating costs.
Since 2015, crypto firms operating in the state of New York have largely been required to apply for a BitLicense. As of February 10th, there were 33 companies involved in crypto and blockchain operating in the state under a virtual currency license, limited purpose trust charter, or money transmitter license. The BitLicense requirement has been a topic of debate, with some claiming that it stifles innovation and economic growth. In April 2022, New York City Mayor Eric Adams suggested that the state scrap the BitLicense regime.
This move by the NYDFS is likely to have significant implications for crypto firms operating in the state. The regulation will provide the NYDFS with additional resources and tools to regulate the industry, but it may also result in increased costs for firms. Nonetheless, the NYDFS believes that the benefits of the regulation will outweigh any potential downsides, and that it will help to ensure that the state remains at the forefront of digital asset innovation.