Dive Brief:
- New York’s Department of Financial Services (NYDFS) proposed a measure Thursday that would allow the agency to bill state-licensed crypto businesses for costs related to supervision and exams.
- The fees, stemming from a provision in the state’s fiscal 2023 budget, would help the agency “continue adding top talent to its virtual currency regulatory team,” the department said in a press release.
- Existing rules already allow the agency to charge non-crypto financial institutions licensed in the state for such expenses.
Dive Insight:
NYDFS will take comments for 60 days after the proposed measure is published in the State Register. A 10-day pre-proposal comment period began Thursday, the agency said .
NYDFS touted itself Thursday as a first mover in virtual currency regulation, saying it established the nation’s first guidance in the sector in 2015.
“As the virtual currency industry evolves, DFS is leading by doing, and will remain committed to keeping New York the model for robust, forward-looking regulation,” the agency said in its press release. “Today’s actions help advance this important work.”
The proposal came on a day when the regulation of crypto firms at the federal level took a spotlight. The Senate Agriculture Committee on Thursday heard testimony from Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam on how that agency views oversight of the sector.
Two senators on the committee, Debbie Stabenow, D-MI, and John Boozman, R-AR, introduced a bill in August that would define a new asset class — digital commodities — and let the CFTC oversee the trading of tokens, including Bitcoin and Ether, that meet that standard.
Sens. Kirsten Gillibrand, D-NY, and Cynthia Lummis, R-WY, meanwhile, unveiled a bill in June that sought to clarify which digital assets would be commodities versus securities.
That question has permeated numerous discussions on how to police crypto. The Securities and Exchange Commission (SEC), over the past year, has leaned on the 1946 Howey test to define certain crypto products as securities and has come under fire from industry leaders such as Coinbase, which have accused the agency of regulation by enforcement.
The crypto field since July has seen several high-profile bankruptcies, including at FTX, BlockFi, Voyager and Celsius.
At The New York Times’ DealBook Summit on Wednesday, FTX ex-CEO Sam Bankman-Fried said he spent “hundreds, even thousands, of hours meeting with regulators,” indicating that a state measure charging crypto firms for supervision could be a relatively lucrative prospect at a time when regulation is first being developed.
“The ability to collect supervisory costs will help the Department continue protecting consumers and ensuring the safety and soundness of this industry,” NYDFS’s superintendent, Adrienne Harris, said Thursday in a statement.
