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 legislation.
Although it may seem strange, the DFS frequently charges regulated non-crypto financial organizations 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.
Harris also outlines that these “regulations will allow the Department to continue adding top talent to its virtual currency regulatory team.”
Through licensing, supervision and enforcement, we hold companies to the highest standards in the world,” Harris said, adding that “the ability to collect supervisory costs will help the Department continue protecting consumers and ensuring the safety and soundness of this industry.”
The proposal document states that the DFS would assess fees based on the sum of running costs incurred by overseeing licensees as well as the “proportion judged just and reasonable” for additional operating and overhead costs.
As a result, there is no standard amount that all businesses must pay because the degree of oversight varies. Instead, the entire sum due would be divided over 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.
In a U.S. Senate committee hearing on the FTX debacle on Dec. 1, Commodity Futures Trading Commission (CFTC) chair Rostin Behnam stated that while he feels his agency has the tools to oversee crypto, there are gaps in legislation that need filling.
“Without new authority for the CFTC, there will remain gaps in a federal regulatory framework, even if other regulators act within their existing authority,” he said.
