Doing business in New York will be a tad more expensive for crypto companies. The state will start making crypto companies licensed to operate in New York pay for the cost of making sure they are complying with regulations.
The provision was included in New York’s fiscal 2023 budget, which includes “a new authority to collect supervisory costs from licensed virtual currency businesses, like the department already does for banking and insurance companies,” Adrienne Harris, the superintendent of the state Department of Financial Services, said in a statement.
She noted that New York, the first state to issue operating licenses to crypto companies through its BitLicense, continues to “attract more licensees and the most crypto startup funding of any state in the nation."
New York's move has its critics. Cathy Yoon, chief legal officer of MPCH, said New York’s virtual currency licensing requirements are “high barriers to entry” for many crypto companies. The licensing requirements apply to most virtual currency businesses seeking to do business with New Yorkers.
“They are difficult and expensive to obtain and require a tremendous outlay of capital, which is a ridiculous burden on startups,” Yoon added.
The BitLicense currently requires a $5,000 application fees, with additional capital requirements. The annual assessment fees the DFS will charge virtual currency firms aren't set yet, but similar fees for other financial institutions can run in the tens of thousands of dollars a year, designed to recoup the department's operating costs.
Crypto firms that only create software aren't subject to the existing or future licensing fees, but any businesses that custody customers' crypto for them must obtain a license, according to a DFS FAQ. Consumers who buy, sell or mine crypto don't need a license, though larger mining operations might need one.
New York has become a critical lobbying battleground for the crypto industry. About a dozen crypto companies and organizations, including Digital Currency Group and Blockchain.com, have spent more than $100,000 a month on lobbying, according to Bloomberg.
Climate TRACE's data show emissions at the facility-level.Image: Climate TRACE