In order to be able to charge licensed cryptocurrency companies for regulating them, the New York State Department of Financial Services (DFS) has presented a proposal to amend state law.
Although it may seem strange, the DFS frequently charges licensed non-crypto financial entities for the costs and expenses of keeping watch over them in accordance with Financial Services Law (FSL).
The initiative is being led by DFS Superintendent Adrienne Harris, who made the announcement via the DFS website on December 1 and has since made it available for public comment for the next ten days.
New York is eyeing to regulate crypto firms like other financial entities
As FSL did not have a requirement for crypto businesses when crypto regulation was accepted in New York in 2015, Harris is essentially aiming to bring virtual currency businesses into line with other regulated financial firms.
Furthermore, Harris notes that these “regulations will enable the Department to continue building out its virtual currency regulatory team with top talent.”
“Through licensing, supervision, and enforcement, we hold companies to the highest standards in the world. “The ability to collect supervisory costs will help the Department continue protecting consumers and ensuring the safety and soundness of this industry.”
New York Harris stated
The proposal document states that the DFS would assess fees based on the sum of operating costs incurred by overseeing licensees as well as the “proportion deemed just and reasonable” for other operating and overhead costs.
As a result, there is no standard amount that all businesses must pay because the amount of oversight varies. Instead, the total amount due would be divided into five payment periods over the course of the fiscal year.
It is not surprising that regulators are rushing to impose more regulatory oversight after the crypto sector experienced yet another multi-billion dollar implosion, 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 said that while he believes his organization has the resources to regulate cryptocurrency, there are gaps in the law that need to be filled during a hearing before a U.S. Senate committee on the FTX scandal on December 1.