New legislation was proposed in New York on Thursday that aims to impose additional regulations on digital asset companies. The proposed law, known as the “CRYPTO” law – short for “Cryptocurrency Regulatory Yields Protections, Trust, and Oversight” – would make it illegal for digital asset companies to operate without the necessary licenses.
The announcement came from Manhattan District Attorney (DA) Alvin L. Bragg, Jr. and New York State Senator Zellnor Myrie, who highlighted the urgency of regulating the cryptocurrency market in the state.
Crypto bill proposed in New York
According to the duo’s press statementorganizations that exchange, trade, or transport cryptocurrencies in New York must register for a virtual currency license. Failure to do so resulted in simple civil penalties.
In contrast, the CRYPTO bill would introduce criminal penalties for unlicensed operation, bringing New York’s regulatory framework closer to that of the federal system, where unlicensed conduct can result in up to five years in prison.
The new law aims to ensure that digital asset businesses adhere to the same levels of diligence and transparency as traditional money issuers.
Under the new legislationunlicensed operations would fall into the category of unlicensed virtual currency trading activities, which would result in a series of progressive penalties based on the value of the transactions involved.
Violators could face charges ranging from a Class A misdemeanor to a Class C felony for activities involving $1 million or more within a year, potentially resulting in sentences of 5 to 15 years in state prison.
A “shadow financial system”
Prosecutor Bragg expressed concern about the growth of cryptocurrency, describing it as a “shadow financial system” that facilitates money laundering and other criminal activities. “Crypto is the preferred way for bad actors to move and hide the proceeds of crime,” he said.
Bragg further insisted that now is the time for unlicensed cryptocurrency businesses to face criminal repercussions if they fail to comply with due diligence requirements.
Senator Myrie echoed Bragg’s sentiments, noting: “As the use of cryptography has grown, so have illicit activities. » He stressed that New York, as a major financial center, must take its regulatory responsibilities seriously.
Myrie’s bill aims to bring the state in line with 18 other jurisdictions that have made unlicensed virtual currency transactions a criminal offense, to strengthen consumer protections against potential fraud and scams.
This legislative push coincides with a letter from House Democrats to Securities and Exchange Commission (SEC) Chairman Paul Atkins, in which several lawmakers urged the reinstatement of enforcement actions against digital asset companies.
The letter sent Thursday, and signed by Reps. Maxine Waters, Sean Casten and Brad Sherman, expressed deep concerns over the SEC’s recent withdrawal of prosecutions for violations related to “digital asset securities.”
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