The fees will bring virtual currency companies on par with those paid by banking and insurance institutions as a way for the state to recoup operating expense costs and “best support” the industry.
The cost of running a crypto business in New York is about to rise with the state government gearing up to require companies holding a BitLicense to pay assessment fees to ensure they’re complying with regulations.
The rule was included in New York State’s FY2023 budget signed into law on April 9th by Governor Kathy Hochul giving the state’s Department Of Financial Services (DFS) a “new authority to collect supervisory costs from licensed virtual currency businesses,” according to a statement by the DFS.
DFS Superintendent Adrienne Harris said the fees would bring virtual currency businesses in line with those already paid by institutions such as banking and insurance companies and added:
“New York was the first to start licensing and supervising virtual currency companies, and we continue to attract more licensees and the most crypto startup funding of any state in the nation.”
The state of New York was the first in the U.S. to require crypto companies to be licensed with the introduction of the now known “BitLicense”, the application fees for such a permit are currently $5,000 and are subject to vague capital requirements determined by the New York DFS.
The annual assessment fee amount that the DFS will charge crypto firms is currently unknown, but the same fees for other regulated financial institutions can cost tens of thousands of dollars a year.
The DFS states the fees are to assist with paying the operating expenses of regulating crypto firms and “will empower the Department to build staff with the capacity and expertise to best regulate and support this rapidly growing industry.”
Businesses that accept crypto as payment, create software for the crypto space such as self-custody wallets, or give advice on crypto trading aren’t subject to the BitLicense and corresponding new fees.
Recently, the regulation and licensing of crypto in the state have come under fire with billionaire investor Bill Ackman sharing his thoughts in February about New York’s failing policies and how it could make him leave the state.
Ackman appealed to Mayor Eric Adams and Governor Hochul to address the increasing concerns around regulation, saying that easing restrictions and removing regulatory barriers could make New York a “crypto center of innovation.”
Mayor Adams ran with plans to make New York City the “center of the cryptocurrency industry” even taking his first three paychecks in Bitcoin (BTC). Analysis from Cointelegraph in November shows that it’s really up to the New York DFS and state government to enact changes that will attract the industry.