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On January 14, 2026, New York lawmakers kicked off the year by introducing a major proposal to strengthen the state's approach to cryptocurrency regulation: the Cryptocurrency Regulation Yields Protections, Trust, and Oversight Act, or "CRYPTO Act." Announced by Manhattan District Attorney Alvin Bragg and State Senator Zellnor Myrie, the proposal would amend New York's Financial Services Law to criminalize operating a virtual currency business without the required state license.
To conduct virtual currency business in New York State, entities must apply either for a BitLicense or for a charter under the New York Banking Law (for example, as a New York State limited purpose trust company or New York State bank) with approval to conduct virtual currency business. The proposed bill would add a new Section 408-b to the Financial Services Law, defining a "prohibited unlicensed virtual currency act" as engaging in any activity in New York that requires a virtual currency license from the New York Department of Financial Services ("NYDFS") without holding that license. The proposed law makes clear that the new criminal penalties would apply in addition to any existing civil or criminal liability already provided by law.
Under the bill, engaging in a "prohibited unlicensed virtual currency act" would be subject to criminal charges at escalating levels based on the value involved, length of time, and whether the conduct involves proceeds of other crimes. Any unlicensed act is, at a baseline, a Class A misdemeanor. If, in the course of the unlicensed conduct, the person engages in covered virtual currency business activity (e.g., receiving for transmission, transmitting, storing/holding/custody, buying or selling, providing exchange services, administering, or issuing virtual currency) involving $25,000 or more in 30 days or $250,000 or more in one year, or if the person acts knowing the virtual currency is the proceeds of criminal conduct, it is a Class E felony. The charge increases to a Class D felony at $50,000 or more in 30 days or $500,000 or more in one year, and to a Class C felony at $100,000 or more in 30 days or $1,000,000 or more in one year. The bill would take effect immediately upon enactment.
District Attorney Bragg asserts this bill puts crypto businesses on the same footing as traditional financial services businesses, which already face criminal penalties for unlicensed money transmission and related conduct. Senator Myrie has also pointed out that other states explicitly criminalize unlicensed crypto activity, arguing that New York is lagging behind and leaving consumers vulnerable to fraud, scams, and money laundering.
The future of the CRYPTO Act is uncertain. The proposed legislation has been the focus of industry pushback, including from detractors who say that it could undermine the state's economic competitiveness and contains vague, overly broad definitions. Bills of this nature frequently remain in committee or are significantly amended before advancing, and this particular proposal has not yet been moved out of committee or been scheduled for a vote. Additionally, as demonstrated at the federal level with the challenges surrounding passage of the Clarity Act—which seeks to clarify the regulatory jurisdiction over crypto assets—legislation in this space can progress slowly.
If enacted, the CRYPTO Act could significantly reshape the compliance and risk environment for cryptocurrency businesses with any connection to New York. Most notably, it would convert operating without a required virtual currency license from a regulatory issue into a criminal offense. This tough stance on crypto is nothing new for New York, but is another important consideration for businesses looking to do crypto-related business in the state.
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