On Thursday, New York unveiled a bold legislative proposal designed to bring the rapidly evolving cryptocurrency sector under stricter regulation. The initiative, named the “CRYPTO” Act—an acronym for “Cryptocurrency Regulation Yields Protections, Trust, and Oversight”—will outlaw unlicensed operations by digital asset firms, threatening offenders with severe legal repercussions.
The announcement was made in a collaborative statement by Manhattan District Attorney (DA) Alvin L. Bragg, Jr., and New York State Senator Zellnor Myrie, emphasizing the urgent need for a comprehensive framework to govern the growing cryptocurrency marketplace in the state.
NY’s Proposed Crypto Bill
According to their press release, any organization involved in the exchange, trade, or transport of cryptocurrencies within New York will be mandated to hold a virtual currency license. Previously, violators faced civil penalties; however, the proposed CRYPTO Act aims to escalate the consequences by introducing criminal charges for operating without the requisite license.
This legislative measure seeks to align New York’s regulatory environment with federal standards, where unauthorized cryptocurrency activities can lead to imprisonment of up to five years. Under the new terms, businesses that engage in unlicensed activity will be categorized as part of Unlicensed Virtual Currency Business Activity, subjecting them to a tiered penalty system linked to the volume of their transactions.
Penalties could range from a Class A misdemeanor to a Class C felony for firms involved with transaction volumes exceeding $1 million annually, with potential sentences extending from 5 to 15 years in state prison.
A “Shadow Financial System”
District Attorney Bragg voiced significant concerns regarding the rampant growth of cryptocurrency, labeling it a “shadow financial system” that is often exploited for money laundering and various criminal endeavors. “Crypto is the go-to means for bad actors to move and hide the proceeds of crime,” he asserted, further stating that the time has come for unlicensed crypto businesses to face criminal charges for their negligence in maintaining industry standards.
Senator Myrie added his voice to the issue, pointing out that while the adoption of cryptocurrency surges, so does the occurrence of illicit activities. He underscored that New York, as a significant global financial jurisdiction, bears a responsibility to rigorously uphold its regulatory duties.
This proposal also aims to position New York alongside 18 other jurisdictions that have already made unlicensed virtual currency transactions a criminal offense, thereby enhancing consumer safety and protection against fraud.
The timing of this legislative proposal coincides with a recent sentiment echoed by House Democrats, who reached out to Securities and Exchange Commission (SEC) Chair Paul Atkins, urging for a revival of enforcement measures against digital asset businesses. In the letter sent Thursday and backed by representatives like Maxine Waters, Sean Casten, and Brad Sherman, lawmakers expressed their grave concerns over the SEC’s diminishing commitment to prosecuting violations involving what they termed “digital asset securities.”
