NYDFS to charge digital asset firms for supervision

The New York Department of Financial Services (NYDFS) has adopted a new regulation that allows it to charge digital asset firms for supervision.

The regulation was first proposed in December, channeling the fees charged towards beefing up the digital asset department. NYDFS Superintendent Adrienne Harris pointed out that the move would enable the department to “continue protecting consumers and ensuring the safety and soundness of this industry.”

After calling for and evaluating feedback from the public on the proposal, the NYDFS announced that it had adopted the proposed regulation.

#ICYMI: DFS Superintendent Adrienne A. Harris Announces Adoption of Virtual Currency Assessment Regulation: https://t.co/6W5ShsYjEx pic.twitter.com/xcevSyw2O9

— NYDFS (@NYDFS) April 17, 2023

“As the first prudential regulator of virtual currency in the nation, New York has created a framework that sets the highest standards for safety, soundness, and consumer protection while fostering responsible growth,” Harris commented.

“This regulation provides the Department with additional tools and resources to regulate the virtual currency industry now and in the future as innovators create new products and use cases for digital assets.”

The regulation will be limited to holders of the controversial BitLicense, the New York regulatory approval that digital asset firms need to offer their services in the state. License holders include Bakkt, Robinhood Crypto (NASDAQ: HOOD), Coinbase (NASDAQ: COIN), Bitstamp, and NYDIG. It continues to receive criticism from several circles, with New York Mayor Eric Adams calling for its abandonment last year.

In addition to the new fees, the new regulation will require VASPs to meet rigorous standards for capitalization, anti-money laundering, and cybersecurity.

NYDFS has continued to expand its digital asset regulatory efforts under the stewardship of Harris, a former senior advisor at the U.S. Treasury. The watchdog’s digital asset unit now has close to 50 employees, and with the new revenues expected under this new regulation, it will likely raise the headcount.

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