April 17, 2023
DFS SUPERINTENDENT ADRIENNE A. HARRIS ANNOUNCES ADOPTION OF VIRTUAL CURRENCY ASSESSMENT REGULATION
The Final Regulation Sets Forth the Process to Assess Operating Costs for Virtual Currency Businesses, On Par with Regulated Banking and Insurance Entities
Superintendent of Financial Services Adrienne A. Harris announced today that the New York State Department of Financial Services (DFS) has adopted a final regulation establishing how companies holding a DFS-issued Bitlicense will be assessed for costs of their supervision and examination.
The adopted regulation effectuates a provision in the New York State FY23 Budget giving DFS new authority to collect supervisory costs from licensed virtual currency businesses, similar to other licensees regulated by DFS. This regulation will allow the Department to continue adding top talent to its virtual currency team to continue efficient and effective regulatory oversight.
“As the first prudential regulator of virtual currency in the nation, New York has created a framework that sets the highest standards for safety, soundness, and consumer protection while fostering responsible growth,” said Superintendent Harris. “This regulation provides the Department with additional tools and resources to regulate the virtual currency industry now and in the future as innovators create new products and use cases for digital assets.”
DFS’s virtual currency regulatory framework is modeled after full-scope banking supervision, requiring companies to meet rigorous standards for capitalization, cybersecurity protection, and anti-money laundering protocols, among other requirements. As the virtual currency industry evolves, DFS is engaged with regulators around the world who are seeking to build regulatory frameworks that leverage DFS’s expertise and experience.
Prior to adoption, DFS conducted in-depth research and met extensively with key stakeholders to inform the regulation which applies to entities holding a Bitlicense. The Department received constructive feedback which informed the regulation. At the time that DFS’s first-in-the-nation virtual currency regulation was adopted in 2015, the Financial Services Law did not include a provision for the assessment of operating costs, unlike provisions provided in Banking and Insurance Law for licensed entities. Entities licensed as a limited purpose trust company or a banking organization will continue to be assessed under existing laws and regulations.
A copy of the adopted regulation can be found on the DFS website.