NYDFS Proposes To Charge Crypto Firms For Supervision

Diving Brief:

• New York Department of Financial Services (NYDFS) proposed a measure on Thursday this would allow the agency to charge state-licensed crypto firms for oversight and review costs.
• The fee, stemming from a provision in the state’s fiscal year 2023 budget, would help the agency “continue to add top talent to its virtual currency regulatory team,” the department said. said in a press release.
• Existing rules already allow the agency to charge such expenses to non-cryptographic financial institutions licensed in the state..

Overview of the dive:

NYDFS will take comments for 60 days after the proposed action is posted in the state registry. A 10-day pre-proposal comment period began on Thursday, the agency said.

NYDFS billed itself as a pioneer in virtual currency regulation on Thursday, saying it established the first national guidelines in the sector in 2015.

“As the virtual currency industry evolves, DFS leads by practice and will remain committed to making New York the model for strong, forward-looking regulation,” the agency said in its press release. . “Today’s actions help move this important work forward.

The proposal came on a day when regulation of crypto businesses at the federal level took center stage. The Senate Agriculture Committee heard testimony Thursday from Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam on how the agency views oversight of the sector.

Two senators from the committee, Debbie Stabenow, D-MI, and John Boozman, R-AR, tabled a bill in August it would define a new asset class – digital commodities – and let the CFTC oversee the trading of tokens, including Bitcoin and Ether, that meet that standard.

The senses. Kirsten Gillibrand, D-NY, and Cynthia Lummis, R-WY, meanwhile, unveiled a bill in June, which sought to clarify which digital assets would be commodities versus securities.

This question has permeated many discussions about how to control crypto. The Securities and Exchange Commission (SEC)over the past year has relied on the 1946 Howey Test to define certain crypto products as securities and has come under fire from industry leaders such as Coinbase, who have accused the agency of regulation by execution.

The crypto space since July has seen several high-profile bankruptcies, including at FTX, BlockFi, Voyager, and Celsius.

At the New York Times DealBook Summit on Wednesday, former FTX CEO Sam Bankman-Fried said he had spent “hundreds, if not thousands of hours meeting with regulators,” indicating that a State measure charging for oversight of crypto businesses could be relatively lucrative. perspective at a time when regulations are being developed.

“The ability to collect oversight costs will help the Department continue to protect consumers and keep this industry safe and sound,” NYDFS Superintendent Adrienne Harris said in a statement Thursday.