The New York Department of Financial Services (NYDFS) now has more authority to build a crypto regulatory framework.
This was made possible by a Senate budget provision for the fiscal year 2023 that authorized the department to develop a new evaluation system for crypto firms subject to its regulatory oversight.
The NYDFS is the state’s cryptocurrency regulator, issuing the controversial BitLicense. With this new rule, it will be required to ensure that its oversight and regulation of crypto assets are consistent with its oversight and regulation of conventional financial institutions.
The clause seems to be concerned with determining who would cover the expense of the regulator’s evaluation. The budget specifies that the funds would be used to “afford operational expenditures.”
Additionally, it states that “the expenditures associated with any inspection of the affairs of any person regulated according to this chapter who participates in virtual currency commercial activity will be borne and paid by the regulated person thus inspected.”
Adrienne Harris, the commissioner of the New York Department of Financial Services, stated her support for this move, arguing that it would assist the state’s economy significantly. New York is a leader in regulating cryptocurrency in the United States. The state has its own BitLicense scheme, which crypto firms must get in order to operate in the state.
Stakeholders express opposition to New York’s BitLicense
While BitLicense’s stated goal is to safeguard consumers, some parties have opposed the limitations. Several major exchanges have been unable to register in the state due to the criteria. This has prompted individuals like Bill Ackman to urge a framework reform.
Regardless of BitLicense’s limitations, New York remains a highly pro-crypto jurisdiction. It boasts one of the most complete regulatory regimes for cryptocurrency, and its prominence as a financial center has attracted a large number of crypto businesses.
Notably, New York is not merely a hub for cryptocurrency service providers. Additionally, the state hosts multiple cryptocurrency miners. However, in recent months, mining activity in the state has been met with a barrage of objections from politicians and environmental groups.
The state legislature is presently considering a bill that would impose a three-year embargo on crypto mining. Additionally, officials have made a concerted effort to prevent Greenidge Generation from expanding its mining activities in the state.