New “CRYPTO Act” Would Criminalize Businesses Operating Without a Virtual Currency License, Commonly Seen Facilitating Money Laundering and Funding Crime
Manhattan District Attorney Alvin L. Bragg, Jr., and New York State Senator Zellnor Myrie today announced the introduction of the “CRYPTO” Act, or the “Cryptocurrency Regulation Yields Protections, Trust, and Oversight” Act, to create a new penal law that makes operating a virtual currency business without a license a crime in New York State.
District Attorney Bragg said: “The shadow financial system created by the explosion of cryptocurrency has created an ideal vehicle for money laundering and other crimes in New York State. Crypto is the go-to means for bad actors to move and hide the proceeds of crime. It is long past time for businesses that operate without a virtual currency license and flout due diligence requirements to face criminal penalties. I thank Senator Myrie for his leadership on this issue and urge the legislature to take action this session.”
“As the use of crypto has grown, so has illicit activity. New York is the financial capital of the world and we need to take our responsibilities to the marketplace seriously. My bill would bring New York in line with the 18 other states that have explicitly made unlicensed crypto transactions a crime and help protect consumers and the general public from potential frauds, scams and other financial crimes,” said Senator Zellnor Myrie.
The CRYPTO Act
Currently, entities that exchange, trade, or transmit crypto in New York State have to register for a virtual currency license, but only face civil penalties if they fail to register – unlike the federal system, where a criminal conviction can carry 5 years in prison, and 18 other states whose laws carry criminal consequences.
The CRYPTO Act ensures that cryptocurrency is subject to the same due diligence and disclosure requirements as traditional money transmitters by creating a new law that criminalizes operating a virtual currency business without a license.
If businesses operate without a license, they will be subject to criminal prosecution for Unlicensed Virtual Currency Business Activity, which carries graduated penalties depending on the value of the currency over specified periods of time.
Beginning at an A misdemeanor, offenders could face up to a C felony if the cryptocurrency in question amounts to $1 million or more within one year or less – a charge that carries a maximum of 5-to-15 years in state prison.
Read the legislation here.
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