New York State Department of Financial Services 23 NYCRR Part 102: Virtual Currency Licensee Assessments
- Source: dfs.ny.gov
Treliant Takeaway:
By partnering with Treliant’s team of experts, together we can implement a seamless adoption of this new regulation while maintaining the highest standards of safety, effectiveness, consumer protection, and prevent financial crime. Our team has deep experience helping our clients prepare for and manage the complexity of regulatory change.
Highlights:
Background
In 2015, the Department of Financial Services (DFS) implemented 23 NYCRR Part 200, mandating that individuals involved in virtual currency business activity obtain a license before conducting any such activity in New York. However, at that time, the Department charged and collected costs and expenses only from persons regulated by the Department under the Banking Law or the Insurance Law, without providing for any assessment of costs for individuals regulated under the Department by the Financial Services Law (FSL).
To address this discrepancy, FSL Section 206 was amended in 2022 to require the Department to assess the costs and expenses associated with regulating individuals licensed under 23 NYCRR Part 200. As a result, individuals involved in virtual currency business activity are assessed for the operating expenses of the Department that are solely related to regulating them.
Key Updates
On April 17, 2023, Adrienne A. Harris, Superintendent of Financial Services, announced the adoption of a final regulation by the DFS defining how licensed virtual currency businesses will be assessed for operating costs. The following material was also provided as part of this regulation:
- Billing and Assessment
Licensee subject to assessment pursuant to this Part is billed five times for a fiscal year: four quarterly assessments (each approximately 25 percent of the anticipated annual amount) based on the estimated budget to cover the Total Operating Cost at the time of the billing, and a final assessment (or true-up), based on the actual Total Operating Cost for the fiscal year.
- Computation of Assessment
The total annual assessment for a Licensee will be the sum of: The Supervisory Component and its Regulatory Component.
- Penalties/Enforcement Actions
Enforcement actions for nonpayment could include, and are not limited to: suspension, revocation, expiration or termination of a license. As deemed appropriated by the superintendent.
- Special Assessments
The process by which expenses are assessed and allocated are determined by the superintendent and calculated in alignment with this stipulation.
This regulation will allow the Department the ability to continue to evolve with and maintain rigorous regulatory standards for capitalization, anti-money laundering and other banking requirements. DFS has set the tone and is promoting the standards by partnering with regulators around the globe seeking to build comparable frameworks dedicated to keeping pace with the evolution of the virtual currency industry.
This Takeaway was co-authored by: Kari Trautvetter
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