The fees will be comparable to those paid by banks and insurance companies, allowing the state to recoup operating expenses and support the virtual currency industry.
The cost of operating a crypto business in New York is about to increase, as the state government is preparing to require BitLicense holders to pay assessment fees to ensure compliance with regulations.
The rule was included in New York State’s FY2023 budget, which Governor Kathy Hochul signed into law on April 9th, giving the state’s Department Of Financial Services (DFS) “new authority to collect supervisory costs from licensed virtual currency businesses,” the DFS stated in a statement.
DFS Superintendent Adrienne Harris stated that the fees would bring virtual currency businesses in line with those already charged by financial institutions and insurance companies.
With the introduction of the now-famous “BitLicense,” New York became the first state in the United States to require crypto companies to be licensed; application fees for such a permit are currently $5,000 and are subject to vague capital requirements determined by the New York DFS.
The amount of the DFS’s annual assessment fee is unknown at the moment, but similar fees for other regulated financial institutions can cost tens of thousands of dollars per year.
According to the DFS, the fees will help cover the costs of regulating crypto firms and “will enable the Department to build a staff with the capacity and expertise necessary to effectively regulate and support this rapidly growing industry.”
Businesses that accept cryptocurrency as payment, develop crypto-related software such as self-custody wallets or provide crypto trading advice are exempt from the BitLicense and associated new fees.
Recently, New York’s regulation and licensing of cryptocurrency have come under fire, with billionaire investor Bill Ackman expressing his concerns in February about the state’s failing policies and how they could force him to leave.
Ackman urged Mayor Eric Adams and Governor Andrew Cuomo to address growing regulatory concerns, stating that easing restrictions and removing regulatory barriers could transform New York into a “crypto center of innovation.”
Mayor Adams campaigned on a platform of transforming New York City into the “center of the cryptocurrency industry,” even accepting his first three paychecks in Bitcoin (BTC).