Doing virtual currency business in New York just got significantly harder with the imposition of annual assessment fees on firms. The move has been touted to bring parity between digital asset companies and other traditional financial institutions.
At the start of the week, the New York digital asset space was greeted with the announcement of a new fee imposed on them. Virtual currency firms that possess a BitLicense are now required to pay an assessment fee to ensure their operations are up to date. The new order finds its validity in the state’s FY2023 budget that came into law last April 9 after it was approved by Governor Kathy Hochul.
The new law authorizes the Department of Financial Services (DFS) to “collect supervisory costs from licensed virtual currency businesses.”
DFS Superintendent Adrienne Harris praised the Governor and the legislation for the passing of the budget that creates new and wider powers for the government agency.
“This new authority will empower the Department to build a staff with the capacity and expertise to best regulate and support this rapidly growing industry,” said Harris.
She noted that New York was the first state to begin the issuance of licenses to digital asset firms and believed that the state would “continue to attract more licensees and the most crypto startup funding of any state in the nation.”
Moreover, the assessment fees would be equal to the amount paid by traditional financial institutions in the state. While the DFS did not delve into the details, it is easy to infer from precedents that the amount would run into thousands of dollars for the companies. The DFS has stated that the fees would be used to offset some of the operational expenses associated with running the Department.
It is important to note that the new regime of fees is only applicable to the holders of the BitLicense and not to businesses that accept virtual assets as payment or those that offer advice for digital currency trading.
The difficult digital currency terrain of New York
Digital currency activists have decried the state of virtual asset space in New York, citing the difficulty of operations. The companies have to obtain a BitLicense with application fees climbing as high as $5,000 and have to pass the strict requirements of the DFS.
Bill Ackman, a serial investor, noted the trend of New Yorkers leaving because of the hurdles imposed by BitLicense. Ackman called on Governor Hochul to “remove barriers, create opportunities for growth and innovation.”
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