ALBANY, N.Y.–The New York State Department of Financial Services has announced plans to start charging cryptocurrency firms registered in the state for the costs of annual supervision and examination.
In its newly adopted rule, applicable to those holding a so-called Bitlicense, aligns the crypto sector more closely with how the agency bills insurance and banking firms in New York for the assessment fees that fund the agency’s operations.
The assessment charges, proposed in December, will help the New York regulator bring in additional resources and hire more staff to expand its virtual currency unit, according to the department.
The NYDFS has strengthened its digital asset unit staffing over the past year, Superintendent Adrienne A. Harris said during a recent event, noting the crypto unit now employs more than 50 people.
Basis For Fees
The assessment fees will in part be based on a formula of a crypto firm’s size and complexity, Harris said at the conference, according to the Wall Street Journal. The assessment, she said, will ultimately “go a long way toward helping the space grow and helping make sure it grows safely.” 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.”
As the Journal noted, the NYDFS adopted its virtual currency regulatory regime, known as the Bitlicense, in June 2015, and was one of the first agencies in the country to do so. The licensing requirements, modeled after its banking supervision requirements, asks crypto businesses to meet certain standards for capitalization, cybersecurity protection and anti-money-laundering protocols, among others.
The regulation at the time didn’t include a provision for assessment costs, the NYDFS said.
How Firms Will be Billed
“The agency said it has done research and met extensively with industry stakeholders to inform the new regulation before adopting it,” according to the Journal. “Those licensing a limited purpose trust company or a banking organization will continue to be examined under existing laws.”
Each crypto firm will be billed five times for a fiscal year, four estimated quarterly assessments and one true-up based on the firm’s actual expenses for the year, the new regulation said.
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