This January, Adrienne A. Harris was confirmed as superintendent of New York’s Department of Financial Services, which administers New York’s BitLicense program, among others. In a March 28 interview, Harris discussed the BitLicense program in detail and addressed some of its longstanding issues, including its slow response times to applicants and updating some of the outdated regulatory and operational aspects of the program.
Harris acknowledged the program’s extensive delays in evaluating and assessing new BitLicense applications. Addressing the program’s response time, Harris said “we are building out that bureau quite a bit. We’ve hired a number of people already and we’ve got more to do there, but it’s my goal to make that application process much more streamlined, though, again, without sacrificing the regulatory rigor that we need.”
Harris discussed some changes that have already been implemented since her arrival at the position, including adding a section to the BitLicense FAQ specifically addressing the application process and clarifying the timing of application reviews. Harris also outlined some of her plans for enhancing the BitLicense program going forward, including hiring thought leaders, engaging with artificial intelligence and machine learning in financial services, leveraging innovation to fill gaps in the financial system to serve the underserved and marginalized, and increasing engagement with virtual currency federal regulators and enforcers.
On the heels of Harris’s comments, on April 9, the New York State Senate passed their 2023 budget, which included a provision tasking New York’s Department of Financial Services with developing a new “assessment” for Bitlicensees to cover the cost of their supervision, similar to what the Department already does for other regulated institutions, so as to bring its oversight mandate of virtual currencies in line with how the Department supervises more traditional banks and financial services firms. As a result, current and future Bitlicensees will likely have to pay annual supervisory assessment costs in addition to the one-time $5000 Bitlicense fee. While the new BitLicense fees have not been announced, these assessments can range from 15,000 to over $80,000 for other institutions, depending on the institution’s size and type.
In response to the budget’s passage, Harris praised the Department’s “new authority to collect supervisory costs from licensed virtual currency businesses, like the Department already does for banking and insurance companies [. . .] This new authority will empower the Department to build a staff with the capacity and expertise to best regulate and support this rapidly growing industry.”
Putting It Into Practice: Hopefully, future Bitlicense applicants may see some relief from the lengthy application process. But licensees should not be surprised if it comes at the increased cost of annual supervisory assessments.