The New York State Department of Financial Services (DFS) has suggested changing state laws to allow it to charge licensed crypto companies for regulating them.
The new proposal comes eight months after the New York State Senate initially permitted the NYDFS to tax the crypto companies it monitors, bringing the regulator's crypto supervision mandate in line with how it oversees more traditional banks and financial services organizations.
The plan is being spearheaded by DFS Superintendent Adrienne Harris, who published the change on the DFS website on Dec. 1 and has asked for public feedback over the next 10 days.
As Financial Services Law (FSL) did not include a provision for crypto companies when crypto regulation was enacted in New York in 2015, Harris is essentially aiming to bring virtual currency businesses into line with other regulated financial institutions in the state.
Furthermore, Harris notes that these "regulations will allow the Department to continue adding top talent to its virtual currency regulatory team."
"Through licensing, supervision, and enforcement, we hold companies to the highest standards in the world," Harris said. "The ability to collect supervisory costs will help the Department continue protecting consumers and ensuring the safety and soundness of this industry."
While this may appear to be an unusual idea, it is standard procedure under FSL for the DFS to charge licensed non-crypto financial institutions for the cost and costs of keeping oversight over them.
The DFS would charge firms based on the entire operational expenditures of managing licensees and the "proportion deemed just and reasonable" for additional operating and overhead expenses, according to the draft document.
As a result, there is no set amount that all companies must pay because the amount of oversight varies; however, the total amount owed would be divided into five payment periods over the fiscal year.
The assessments will only apply to cryptocurrency businesses that have a BitLicense, a unique business license provided by NYDFS that enables enterprises to operate in New York. A BitLicense, which is notoriously tough to obtain, is now held by just 22 companies, and just three have been given this year.
It is not unexpected that regulators are rushing to impose more regulatory monitoring after the crypto business had yet another multi-billion dollar meltdown, this time as a result of the now-bankrupt FTX, Alameda Research, and former golden boy Sam Bankman-Fried.
Commodity Futures Trading Commission (CFTC) chair Rostin Behnam remarked in a U.S. Senate committee hearing on the FTX crisis on Dec. 1 that while his agency believes it has the means to monitor crypto, there are holes in legislation that need to be filled.
