On Thursday, a new legislation was proposed in New York that aims to impose additional regulations on digital asset firms. The proposed law, known as the “CRYPTO” Act—short for “Cryptocurrency Regulation Yields Protections, Trust, and Oversight”—would make it illegal for digital asset firms to operate without the necessary licenses.
The announcement came from Manhattan District Attorney (DA) Alvin L. Bragg, Jr., and New York State Senator Zellnor Myrie, who emphasized the urgency of regulating the cryptocurrency marketplace in the State.
NY’s Proposed Crypto Bill
According to the duo’s press statement, organizations that exchange, trade, or transport cryptocurrencies in New York are required to register for a virtual currency license. Failure to do so has resulted in merely civil sanctions.
In contrast, the proposed CRYPTO Act would introduce criminal penalties for operating without a license, bringing New York’s regulatory framework closer to that of the federal system, where unauthorized conduct can result in up to five years in prison.
The new Act aims to ensure that digital asset businesses adhere to the same levels of diligence and transparency as traditional money transmitters.
Under the new legislation, unlicensed operations would fall under the category of Unlicensed Virtual Currency Business Activity, leading to a series of graduated penalties based on the value of the transactions involved.
Offenders could face charges ranging from a Class A misdemeanor to a Class C felony for activities involving $1 million or more within a year, potentially resulting in sentences of 5 to 15 years in state prison.
A “Shadow Financial System”
District Attorney Bragg expressed concern about the growth of cryptocurrency, describing it as a “shadow financial system” that facilitates money laundering and other criminal activities. “Crypto is the go-to means for bad actors to move and hide the proceeds of crime,” he stated.
Bragg further urged that the time has come for unlicensed cryptocurrency businesses to face criminal repercussions for not adhering to due diligence requirements.
Senator Myrie echoed Bragg’s sentiments, noting, “As the use of crypto has grown, so has illicit activity.” He emphasized that New York, as a major financial hub, must take seriously its regulatory responsibilities.
Myrie’s bill aims to align the state with the 18 other jurisdictions that have made unlicensed virtual currency transactions criminal offenses, to enhance consumer protection against potential fraud and scams.
This legislative push coincides with a letter from House Democrats to Securities and Exchange Commission (SEC) Chair Paul Atkins, in which several lawmakers urged the reinstatement of enforcement actions against digital asset firms.
The letter sent on Thursday and signed by Representatives Maxine Waters, Sean Casten, and Brad Sherman, expressed deep concerns regarding the SEC’s recent retreat from prosecuting violations related to “digital asset securities.”
Featured image from DALL-E, chart from TradingView.com
