The New York State Department of Financial Services (NYDFS) said it will start billing cryptocurrency entities registered in the state in exchange for annual examination and supervision.
Superintendent Adrienne Harris explained the fees will be different for each organization, depending on their size and complexity.
Bringing Crypto Closer to Banks
The NYDFS stated the new rule will apply to those entities which have already obtained the so-called Bitlicense. The financial regulator adopted the regulatory regime in 2015, requiring crypto businesses to meet various standards for capitalization, anti-money laundering protocols, and cyber-security protection.
Each firm will pay fees five times per fiscal year (four estimated quarterly settlements and one based on the actual expenses). The legislation coincides with the beginning of New York’s budgetary year (April 1) and its end (March 31).
The amendment aims to align the cryptocurrency sector more closely with banking institutions and insurance firms since they are obliged to pay annual fees to the NYDFS in exchange for supervision. Superintendent Harris believes the local digital asset sector could get a lot of benefits from its collaboration with the watchdog:
“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.”
Eric Soufer – an executive at consulting firm Tusk Strategies – praised the NYDFS for its approach toward the crypto field, arguing it is among the few that realize 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.”
The NYDFS’ Previous Guidance
The regulator previously urged companies operating in the state to set apart clients’ cryptocurrency holdings from their own assets since co-mingling could result in a severe financial loss. They should also release records and keep a “clear internal audit trail” to notify customers about any transactions involving their funds.
The NYDFS outlined the increasing interest in digital assets in the past few years, believing the market needs to function under a comprehensive regulatory framework:
“As stewards of others’ assets, virtual currency entities (VCE) that act as custodians play an important role in the financial system and, therefore, a comprehensive and safe regulatory framework is vital to protecting customers and preserving trust.”