Although it may seem strange, the DFS frequently charges regulated non-crypto financial organisations for the costs and expenses of keeping watch over them in accordance with Financial Services Law (FSL).
In order to be able to charge licenced cryptocurrency companies for regulating them, the New York State Department of Financial Services (DFS) has presented a proposal to amend state legislation.
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.
Furthermore, Harris notes that these “regulations will enable the Department to continue building out its virtual currency regulatory team with excellent expertise.”
According to Harris, “we hold companies to the highest standards in the world through licensing, supervision, and enforcement,” and he added that “the ability to collect supervisory costs will help the Department continue protecting consumers and ensuring the safety and soundness of this industry.”
As FSL did not include a provision for crypto enterprises when crypto regulation was enacted in New York in 2015, Harris is essentially aiming to bring virtual currency businesses into line with other regulated financial institutions in the state.
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 unexpected that regulators are rushing to impose more regulatory monitoring after the crypto business had yet another multi-billion dollar meltdown, this time as a result of the now-bankrupt FTX, Alameda Research, and former golden boy Sam Bankman-Fried.
Commodity Futures Trading Commission (CFTC) chair Rostin Behnam said that while he believes his organisation has the resources to regulate cryptocurrency, there are loopholes in the law that need to be filled during a hearing before a U.S. Senate committee on the FTX scandal on December 1.
Even if other regulators act within their existing jurisdiction, he said, “gaps in a federal regulatory framework will remain without new authority for the CFTC.”