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New York: Bill Promises to Prohibit Bitlicensing Fees

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The New York Assembly has introduced a new bill that will possibly turn the state into a friendlier market for crypto traders. The bill’s sponsors say that it is intended to protect crypto investors, “prohibit licensing fees, and “safeguard” cryptocurrency activities. They want the current Bitlicense regulations, which they say are costly, replaced with a new licensing regime that is based on audits. The bill is also intended to support the growth of the crypto industry.

Introduction of a digital seal

If the Assembly Bill A09899 is adopted, it will amend the state’s banking law, with the current licensing regime being replaced with another licensing mechanism that is based on audits. This will reassure customers and give investors more protection. Section §9-x of the proposed bill will require any corporate entity or private individual conducting any crypto-related business to be audited. Audits will be done by public or private third-party depository services.

The auditors will see to it that individuals or firms involved in cryptocurrency activities have incorporated security protocols that will safeguard them from such things as theft, and thus increase public trust. The auditors will also verify whether or not cryptocurrency businesses are maintaining a fund that insures some of their customer’s assets through the Securities Investor Protection Corporation or any other approved Insurer.

Third parties will regularly examine the holdings of individuals or firms involved in crypto businesses, ensuring proper asset ownership. All businesses that fully comply with the law will receive a digital seal of approval that will replace fee-based licenses.

The draft states that: Notwithstanding any rule, regulation or any other law, no person, partnership, corporation or any other entity which conducts cryptocurrency business activities will be required to pay any licensing fee.

Protecting investors

The bill, which was introduced to Assembly by Ron Kim and co-sponsored by many other legislators, is meant to reduce regulatory and bureaucratic burdens on cryptocurrency businesses while also protecting crypto investors. According to the draft, cryptocurrency business activities include reception and transmission of cryptocurrencies. Holding, storing, and maintaining control or custody of cryptocurrencies on behalf of another person are also considered cryptocurrency business activities. However, “transactions that are undertaken for any non-financial purposes” are not covered by the definition of a cryptocurrency business activity.

Over recent months, New York legislators have introduced several cryptocurrency-related to the Assembly. One of them, which is again sponsored by Ron Kim, seeks to create a cryptocurrency task force whose main duty will be providing the state legislature and the governor information about the possible effects –on financial markets- of implementing cryptocurrencies. Terms like smart contracts, tokens, and blockchain have been defined by other drafts.

New York is one the first states that seek to adopt comprehensive crypto regulations, but there has been some criticism on a number of its aspects. At present, any businesses involved in cryptocurrency activities must have a Bitlicense that is granted by New York’s Department of Financial Services. However, the state’s law does not require crypto firms to have a full money-transmitter license.

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