Crypto firms with New York BitLicense will be required to pay annual fees

The cost of doing crypto business in New York is about to rise as the state government prepares to require BitLicense holding companies to pay assessment fees to make sure they comply with the rules.

Digital currency companies in New York State will pay the same fees as banking and insurance institutions, allowing the state to recover operating costs and “best support” for the industry.

The rule was included in the New York State Budget for Fiscal Year 2023, signed into law on April 9 by Gov. Kathy Hochul , giving the State Department of Financial Services (DFS) “new authority to levy oversight costs on licensed virtual currency businesses,” DFS said in a statement.

DFS Superintendent Adrienne Harris said the fees would bring digital currency businesses in line with those already paid by institutions such as banking and insurance companies.

“New York was the first to license and control virtual currency companies, and we continue to attract more licensees and the largest cryptocurrency startup funding of any state in the country,” she added.

New York State was the first in the United States to require the licensing of crypto companies with the introduction of a special permit, the so-called “BitLicense”. The application fee for such a permit is currently $5,000 and is subject to vague capital requirements set by the New York DFS.

The amount of the annual valuation fee that DFS will charge crypto firms is currently unknown, but the same fees for other regulated financial institutions could cost tens of thousands of dollars per year.

DFS says the fees are intended to help pay for the operating costs of regulating cryptocurrency firms and “will enable the Department to recruit staff with the ability and experience to best regulate and support this rapidly growing industry.”

Companies that accept cryptocurrency as payment, create software for the cryptocurrency market such as self-storage wallets, or provide cryptocurrency trading advice are not subject to BitLicense and related new fees.

The regulation and licensing of crypto firms in the state have come under fire recently, and in February, billionaire investor Bill Ekman shared his thoughts on New York’s failed policies and how they could force him to leave the state.

Ekman has reached out to Mayor Eric Adams and Governor Hochul to address growing concerns about regulation, saying that easing restrictions and removing regulatory barriers could make New York City “a hotbed of cryptocurrency innovation.”

Mayor Adams has come up with plans to make New York “the center of the cryptocurrency industry”, even receiving his first three salaries in bitcoin (BTC). But in fact, the New York DFS and the state government should consider changes that will make its jurisdiction more attractive to crypto firms.