NYDFS Gets Additional Oversight Authority Over Digital Currency Firms

On April 15, the New York Department of Financial Services (NYDFS) will get additional oversight authority over the digital currency industry under the state Senate’s new budget provision for the fiscal year 2023.

NYDFS is one of the most advanced state-level digital asset regulators in the United States and is the first in the country to license virtual asset service providers (VASPs). Popularly known as BitLicense, the coveted license has become the country’s gold standard, with many established companies, including Kraken, having no access to it.

The new budget passed by the state Senate on Saturday includes a provision to task the NYDFS with a new assessment of the VASPs it regulates. The appraisal will subject VASPs to the same regulatory scrutiny as banks and other traditional financial services.According to one media report, the budget states that these new assessments will only cover expenses tied directly to the overseeing digital asset companies.“The expenses of every examination of the affairs of any person regulated pursuant to this chapter that engages in virtual currency business activity shall be borne and paid by the regulated person so examined, but the superintendent, with the approval of the comptroller, may in the superintendent’s discretion for a good cause shown remit such charges,” the budget reads.In addition, the budget includes a new power to charge regulatory fees to licensed virtual currency companies, as the ministry has already done for banks and insurance companies. This new authority will empower the Department’s staff with the capacity and expertise to establish the best regulation to support this fast-growing industry.