NYDFS to Charge Cryptocurrency Firms for Annual Check-Ups
The New York State Department of Financial Services (NYDFS) has announced that it will start invoicing cryptocurrency organizations registered in the state, in exchange for annual review and supervision. Superintendent Adrienne Harris explained that the fee will vary for each organization, depending on their size and complexity.
The new rule will apply to those subjects who have already received a so-called Bitlicense. The financial regulator adopted the regulation in 2015, requiring crypto businesses to comply with various standards of capitalization, anti-money laundering protocols, and cybersecurity protection.
Each firm will pay fees five times per fiscal year (four quarterly payments and one based on actual expenses). Legislation coincides with the beginning of New York’s fiscal year (April 1) and its end (March 31).
The amendment is intended to more closely link the cryptocurrency sector with banking institutions and insurance companies, as they are required to pay NYDFS annual fees in exchange for supervision. Superintendent Harris believes that the local digital asset sector can benefit greatly from collaboration with the watchdog:
“When you can work hand in hand with your regulatory agency and your experts, we can help identify problems early before they metastasize, and that’s truly a service we can provide to the industry, and it helps us as regulators better control markets and protect consumers.”
Eric Soufer, executive director of consulting firm Tusk Strategies, praised NYDFS for its approach to the crypto sphere, stating that it is one of the few that understands the need for appropriate rules in this area.
The regulator previously called on companies operating in the state to separate customers’ cryptocurrency assets from their own, as joint mixing can lead to serious financial losses. They must also publish records and keep a “clear internal audit log” to inform customers of any transactions with their funds.
NYDFS acknowledged growing interest in digital assets over the past few years, stating that the market must operate within a comprehensive legal and regulatory framework:
“As asset managers, virtual currency organizations (VCEs) that act as custodians play an important role in the financial system, and therefore, a comprehensive and secure legal and regulatory framework is vital to protect customers and maintain trust.”