On April 17, the Superintendent of the New York Department of Financial Services (NYDFS), Adrienne A. Harris, announced that the NYDFS adopted a final regulation establishing how companies with NYDFS-issued BitLicenses will be assessed for costs of their supervision examination.
During the public comment period for the proposed regulation, the NYDFS received four comments, but ultimately declined to make any changes to the proposed rule. The Assessment of Public Comments can be found here.
The comments raised a number of concerns, including that the proposed regulation fails to adequately account for the complexities of different cryptocurrency business models and that the use of the total value of virtual currency held on behalf of all customers, rather than just New York customers, is not an accurate measure for allocating the costs of supervision. In response to these concerns, the NYDFS pointed to the extensive analysis it conducted in preparing the proposed regulation, the fact that given the nature of the industry it would be impossible to establish an assessment mechanism that captured all possible business models, and noted that the commenters did not propose any alternative methodologies. Regarding the use of the total value of virtual currency as a metric in determining the costs of supervision, the NYDFS stated that it determined this was a better metric to assess the amount of oversight required than just the value of funds from New York customers and noted that the regulation uses the number of New York transactions as a key metric for allocating the assessment of supervisory costs.
New York was the first state to establish a comprehensive regulatory framework for crypto companies with the launch of its BitLicense program in 2015. At that time, New York law did not allow for the assessment of operating costs. Now, with its new authority, the NY DFS plans to “continue adding top talent to its virtual currency team to continue efficient and effective regulatory oversight.”