On January 14, 2026, State Senator Zellnor Myrie proposed a bill in the New York State Senate that would amend New York law to make it a criminal offense to operate a virtual currency business in New York without the appropriate license. By introducing the possibility of criminal penalties, Senate Bill S. 8901, the Cryptocurrency Regulatory Yields Protections, Trust, and Oversight Act (CRYPTO Act), would mark a significant regulatory shift in state oversight of virtual currency activities, given New York’s prominence in the regulation of virtual currencies in the United States.
I. Context and political motivation
Senator Myrie jointly announced the bill with Manhattan District Attorney Alvin Bragg, who said it was “high time that companies that operate without a virtual currency license…face criminal sanctions.” Senator Myrie and Attorney Bragg highlighted the purported need to strengthen law enforcement tools to crack down on the “shadow financial system created by the cryptocurrency explosion,” specifically citing a surge in cryptocurrency fraud, money laundering, and schemes targeting vulnerable populations.
II. Key provisions of the bill
New York State currently requires entities that engage in “virtual currency business activities” involving New York or a New York resident to obtain either (1) a license from the New York State Department of Financial Services (NYDFS), commonly referred to as a “BitLicense,” or (2) a charter under New York Banking Law, known as a Limited Purpose Trust Charter (LPTC).
If passed, the CRYPTO Act would make New York the nineteenth state to criminalize unlicensed virtual currency business activities and bring the state in line with federal law that operating as a money transmitter involving digital assets without a state license is already subject to potential criminal penalties.
The bill introduces a progressive system of criminal sanctions, in addition to possible civil sanctions:
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- Class A misdemeanor for any unlicensed activity.
- Class E felony if (A) the unlicensed activity involves $25,000 or more in 30 days, $250,000 or more in one year, or (B) if the person knows that the virtual currency is proceeds of crime.
- Class D felony if the unlicensed activity involves (A) $50,000 or more in 30 days, or (B) $500,000 or more in one year.
- Class C felony if the unlicensed activity involves (A) $100,000 or more in 30 days, or (B) $1 million or more in one year.
Each of the offenses carries potential prison sentences, with less than a year for misdemeanors and, according to the announcement, sentences of five to 15 years for a Class C felony conviction.
III. Consequences
The CRYPTO bill, coupled with vocal support from DA Bragg, indicates that New York may seek to increase enforcement against unlicensed virtual currency businesses operating in the state. The day before the CRYPTO bill was announced, DA Bragg warned of the risks associated with various crypto businesses, such as crypto ATMs at local stores, P2P exchanges, and mixers. This comes against the backdrop of U.S. Deputy Attorney General Todd Blanche’s April 2025 memorandum, Ending Regulations of Prosecution, which directs federal prosecutors not to charge, among other things, unauthorized money transmission violations under 18 USC §§ 1960(b)(l)(A) and (B) “unless there is evidence that the defendant had knowledge of the requirement to license or registration in question and willfully violated any such requirement.
Entities operating in the virtual currency industry in New York should evaluate their compliance with NYDFS regulations given the potential risk of criminal prosecution in the future, even if such operations are federally registered under the Bank Secrecy Act and are otherwise compliant with the laws of other jurisdictions.
Although BitLicense or LPTC applications to the NYDFS can be costly and time-consuming (well beyond the filing fee), the possibility of criminal sanctions in the near future could change the calculus for treating non-compliance as a civil matter. As a result, businesses operating in the state without a license, or organizations considering expanding into New York, may wish to seek legal advice regarding NYDFS regulations and potential civil and criminal enforcement risks.
Conclusion
The CRYPTO bill suggests that New York will continue to aggressively regulate virtual asset companies operating in New York. With the risk of criminal sanctions, digital asset compliance takes on increased importance. Market participants should closely monitor the progress of the CRYPTO Act and consider taking steps now to mitigate legal, operational, and reputational risks.
For any questions regarding compliance or business planning under New York’s virtual currency laws, please contact our Digital Assets and Payments team.
