The New York Department of Financial Services (NYDFS) now has more power to establish a regulatory framework for crypto.
This was granted via a budget provision passed by the Senate for the 2023 fiscal year that would allow the department to create a new assessment framework for crypto companies under its regulatory control.
The NYDFS is the regulator responsible for crypto in the state, and it issues the infamous BitLicense. With this new provision, it’ll have to ensure its monitoring and regulation of crypto assets aligns with how it regulates traditional financial institutions.
The provision appears to focus on who’ll bear the cost of the regulator’s assessment. The budget states that the purpose is to “defray operating expenses.”
Going further, it reads, “the expenses of every examination of the affairs of any person regulated pursuant to this chapter that engages in virtual currency business activity shall be borne and paid by the regulated person so examined.”
The superintendent of NYDFS, Adrienne Harris, expressed her support for this development, claiming that it’ll greatly benefit the state economy. New York is at the forefront of crypto regulations in the US. The state has its BitLicense regime, which crypto companies wishing to operate in the state must obtain.
Stakeholders criticize New York’s BitLicense
Although the purpose of BitLicense is to protect consumers, many stakeholders have criticized its restrictions. Due to the requirements, several top exchanges have not been able to register in the state. This has led people like Bill Ackman to call for a revision of the framework.
Regardless of the restrictions of BitLicense, New York is still very much a pro-crypto state. It has one of the most comprehensive frameworks for crypto regulations, and its status as a financial hub has attracted many crypto firms.
Notably, it is not just crypto service providers that are in New York. The state also hosts several crypto miners. But mining activity in the state has been facing continuous protests from legislators and environmental activists in recent months.
A Bill proposing a 3-year moratorium on crypto mining is currently in the state house of assembly. Also, authorities have actively tried to prevent the expansion of Greenidge Generation mining operations in the state.