The New York State Department of Financial Services (NYDFS) stated on Monday, April 17th that it had enacted new regulations targeted at regulating cryptocurrency companies licensed to operate. The new framework will allow the watchdog to “continue adding top talent to its virtual currency team” and focuses primarily on the collection of supervisory fees from businesses.
NYDFS Adopts New Regulations to Regulate Crypto Firms in the State
This past Monday, the NYDFS made a formal announcement announcing new regulations governing businesses dealing in digital assets that are authorized to do so by the state’s Bitlicense. The license is famously challenging to acquire, so the agency is hoping the new requirement will help maintain a high standard among the digital currency companies interested in providing services to residents of New York.
As the country’s first prudential regulator of virtual currency, New York has established a framework that upholds the strictest standards for consumer protection, safety, and soundness while encouraging responsible growth. As new products and use cases for digital assets are developed by innovators, this legislation gives the Department more resources and tools to oversee the virtual currency industry today and in the future.
Adrienne A. Harris, DFS’s chief executive
The rule’s primary focus, according to the press release, is the collection of supervisory fees from crypto businesses. The NYDFS’s authority will be increased, and this will allow it “to continue recruiting top personnel to its virtual currency team to continue efficient and effective regulatory monitoring. The watchdog claims that the rule closely resembles regulations intended to govern the banking industry.
The NYDFS has became more aggressive in recent months in its effort to control companies that deal in digital assets. The agency sued KuKoin in March on the grounds that it is operating illegally in the state without the aforementioned Bitlicense, and in February it ordered the stablecoin issuer Paxos to stop minting its BUSD with the Binance brand.
The US’s sluggish progress on a framework for digital assets
Despite the fact that digital assets have been more than present in the US for over ten years, little has been done to establish a clear regulatory framework for them. The White House released their document on the subject in September, but several months later, at the beginning of 2023, it was released once more with the same message that Congress has to boost up its efforts in relation to cryptocurrencies.
The Securities and Exchange Commission has so far been the organization that has been most active in regulating the market for digital assets. And despite its efforts to broaden and standardize its framework, it has come under heavy fire for what many consider to be its discussion of regulation through enforcement operations. Commissioner Hester Peirce has been a particularly outspoken opponent of the strategy and has charged her agency with being “lazy and paternalistic” in reaction to a $30 million settlement with Kraken.
Individual states have shown to be more active when it comes to passing laws pertaining to cryptocurrencies, but federal lawmakers have been slow to move. Several states passed legislation in the previous months to defend bitcoin miners’ freedom to operate freely from various forms of discrimination. Wyoming also decided to codify privacy protection by passing a statute that protects people’s private key confidentiality.
