Proposed "CRYPTO" Act to Criminalize Unlicensed Crypto Business
Manhattan District Attorney Alvin Bragg and New York State Senator Zellnor Myrie have put forth proposed legislation called the "CRYPTO" Act. This act aims to classify unlicensed cryptocurrency business operations as a felony within New York. The proposed penalties include potential prison sentences of up to 15 years for those involved in transactions exceeding $1 million annually.
Transforming Civil Sanctions into Criminal Charges
The bill, officially titled "Cryptocurrency Regulation Yields Protections, Trust, and Oversight," seeks to convert existing civil penalties for operating without a virtual currency license into criminal charges. Currently, New York requires organizations engaged in the exchange, trade, or transportation of cryptocurrencies to obtain a virtual currency license, but violations are only subject to civil penalties.
The CRYPTO Act would introduce a new criminal offense category specifically for Unlicensed Virtual Currency Business Activity. The severity of the penalties would be determined by the transaction value, starting with a Class A misdemeanor for smaller amounts and escalating to a Class C felony for operations handling $1 million or more within a one-year period. This felony charge carries a potential prison sentence ranging from 5 to 15 years.
Addressing Regulatory Gaps in the Crypto Industry
District Attorney Alvin Bragg characterized the cryptocurrency industry as a "shadow financial system" that facilitates money laundering and other criminal activities. He stated, "Crypto is the go-to means for bad actors to move and hide the proceeds of crime."
Senator Zellnor Myrie noted that this bill would align New York with 18 other jurisdictions that have already implemented criminal penalties for unlicensed virtual currency transactions. He emphasized that as cryptocurrency usage has increased, so has illicit activity, and New York's position as a financial center necessitates more stringent oversight.
This legislative proposal comes shortly after a letter sent by House Democrats, including Representatives Maxine Waters, Sean Casten, and Brad Sherman. The letter urged Securities and Exchange Commission Chair Paul Atkins to re-establish enforcement actions against digital asset firms.