The New York State Department of Financial Services (DFS) has submitted a proposed change that would allow it charge licensed crypto companies.
The proposal is led by DFS Superintendent Adrienne Harris, who is looking for public feedback on the move as the regulator looks to gain further oversight controls.
While it might sound like a strange idea, the DFS frequently charges regulated non-crypto financial entities for the costs and expenses of keeping watch over them in accordance with Financial Services Law (FSL).
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.
Since FSL lacked a clause for crypto enterprises when crypto regulation was introduced in New York in 2015, Harris is essentially aiming to align digital currency businesses with other regulated financial institutions in the state.
Harris also outlines that these “regulations will allow the Department to continue adding top talent to its virtual currency regulatory team.”
“Through licensing, supervision and enforcement, we hold companies to the highest standards in the world,” Harris said, adding that “the ability to collect supervisory costs will help the Department continue protecting consumers and ensuring the safety and soundness of this industry.”
According to the proposal document, the DFS would charge firms based on the total operating expenses of overseeing licensees and the “proportion deemed just and reasonable” for other operating and overhead expenses.
As a result, there isn’t a standard fee that all businesses must pay because the level of oversight varies. The entire amount due would be divided into five payments throughout the course of the fiscal year.
It is not surprising that regulators are rushing to impose more regulatory oversight after the crypto sector experienced yet another multi-billion dollar implosion, 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 organization has the tools to regulate cryptocurrency, there are gaps in the law that need to be filled in a hearing before a United States Senate committee on the FTX scandal on December 1.“Without new authority for the CFTC, there will remain gaps in a federal regulatory framework, even if other regulators act within their existing authority,” he said.