On January 14, 2026, State Senator Zellnor Myrie proposed legislation in the New York State Senate that would amend New York law to make it a criminal offense to operate a virtual currency business in New York without the proper license. By introducing the possibility of criminal penalties, Senate Bill S. 8901, the Cryptocurrency Regulation Yields Protections, Trust, and Oversight Act (CRYPTO Act), would mark a significant regulatory shift in the state’s oversight of virtual currency businesses, given New York’s prominence in virtual currency regulation in the U.S.

I. Background and Policy Motivation

Senator Myrie jointly announced the proposed legislation with  Manhattan District Attorney Alvin Bragg, who stated it was “long past time for businesses that operate without a virtual currency license … to face criminal penalties.” Both Senator Myrie and DA Bragg stressed the purported need for enhanced enforcement tools to crack down on the “shadow financial system created by the explosion of cryptocurrency,” specifically citing a surge in cryptocurrency-related fraud, money laundering, and schemes targeting vulnerable populations.

II. Key Provisions of the Proposed Legislation

New York currently requires entities that engage in “virtual currency business activity” involving New York or a New York resident to obtain either (1) a license from the New York State Department of Financial Services (NYDFS), commonly referred to as a “BitLicense,” or (2) a charter under the New York Banking Law, called a Limited Purpose Trust Charter (LPTC).  

If enacted, the CRYPTO Act would make New York the nineteenth state to criminalize unlicensed virtual currency business activity and would align the state with federal law where operating as a money transmitter involving digital assets without a state license is already subject to potential criminal enforcement.

The bill introduces a graduated system of criminal penalties, in addition to potential civil penalties:

  • Class A misdemeanor for any unlicensed activity.
  • Class E felony if (A) the unlicensed activity involves $25,000 or more in 30 days, $250,000 or more in one year, or (B) if the person knows the virtual currency is criminal proceeds.
  • Class D felony if the unlicensed activity involves (A) $50,000 or more in 30 days, or (B) $500,000 or more in one year.
  • Class C felony if the unlicensed activity involves (A) $100,000 or more in 30 days, or (B) $1 million or more in one year.

Each of the offenses can be punishable by potential prison sentences, with less than one year for misdemeanors, and, according to the announcement, five-to-15-year sentences for a Class C felony conviction.

III. Implications

The proposed CRYPTO Act, coupled with vocal support from DA Bragg, signal that New York may seek to ramp up enforcement against unlicensed virtual currency businesses operating in the state. The day before he announced the proposed CRYPTO Act, DA Bragg warned of the risks of various crypto enterprises, such as crypto ATMs in local stores, P2P exchanges, and mixers. This comes against the backdrop of U.S. Deputy Attorney General Todd Blanche’s April 2025 memorandum, Ending Regulation of Prosecution, which directs federal prosecutors not to charge, among other things, unlicensed money transmission violations under 18 U.S.C. §§ 1960(b)(l)(A) and (B) “unless there is evidence that the defendant knew of the licensing or registration requirement at issue and violated such a requirement willfully.”

Entities operating in the virtual currency business in New York should assess their compliance with NYDFS regulations given the potential risk for criminal prosecution in the future, even if such operations are registered at the federal level under the Bank Secrecy Act and otherwise comply with the laws of other jurisdictions. 

While applications to NYDFS for a BitLicense or LPTC can be costly and time-consuming processes (well beyond the application fee), the possibility of criminal penalties in the near future may change the calculus of treating noncompliance as a civil matter. Accordingly, businesses operating in the state without a license, or organizations planning to expand into New York, may wish to seek legal advice regarding NYDFS regulations and potential civil and criminal enforcement risks.

Conclusion

The proposed CRYPTO Act suggests New York will continue to aggressively regulate virtual asset companies operating in New York. With the potential for criminal penalties, digital assets compliance takes on heightened importance. Market participants should monitor the CRYPTO Act’s progress closely and consider taking action now to mitigate legal, operational, and reputational risks.

For questions about compliance or business planning under New York’s virtual currency laws, please contact our Digital Assets and Payments Team.

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Photo of Carlton Greene Carlton Greene

Carlton Greene is a partner in Crowell & Moring’s Washington, D.C. office and a member of the firm’s International Trade and White Collar & Regulatory Enforcement groups. He provides strategic advice to clients on U.S. economic sanctions, Bank Secrecy Act and anti-money laundering…

Carlton Greene is a partner in Crowell & Moring’s Washington, D.C. office and a member of the firm’s International Trade and White Collar & Regulatory Enforcement groups. He provides strategic advice to clients on U.S. economic sanctions, Bank Secrecy Act and anti-money laundering (AML) laws and regulations, export controls, and anti-corruption/anti-bribery laws and regulations. Carlton is the former chief counsel at FinCEN (the Financial Crimes Enforcement Network), the U.S. AML regulator responsible for administering the Bank Secrecy Act.

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Photo of Anand Sithian Anand Sithian

For high-stakes internal and government investigations and complex regulatory and compliance matters, companies and individuals look to Anand to provide strategic advice and counseling, particularly on issues relating to the Bank Secrecy Act and Anti-Money Laundering (“BSA/AML”), economic sanctions, and digital assets. Anand

…

For high-stakes internal and government investigations and complex regulatory and compliance matters, companies and individuals look to Anand to provide strategic advice and counseling, particularly on issues relating to the Bank Secrecy Act and Anti-Money Laundering (“BSA/AML”), economic sanctions, and digital assets. Anand is resident in the firm’s New York office and a member of the firm’s International Trade, White Collar and Regulatory Enforcement, and Financial Services groups.

A former federal prosecutor, Anand leverages his government experience to guide clients through complex white-collar matters, including grand jury and regulatory investigations, enforcement proceedings, and internal investigations. Anand has deep experience in parallel criminal and civil investigations and proceedings, and often represents clients in defending against civil lawsuits related to government investigations.

Representing some of the world’s largest banks and technology companies, Anand has addressed a wide range of issues, including economic sanctions, BSA/AML; economic sanctions and national security; payments and cryptocurrency; securities laws; and cybersecurity enforcement. In the regulatory space, Anand prides himself on providing commercial and actionable advice, including in the developing areas of digital assets, FinTech, and payments.

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Photo of Chris Murphy Chris Murphy

Chris Murphy is an associate in the New York office of Crowell & Moring, and a member of the firm’s Antitrust and Competition and White Collar and Regulatory Enforcement practices. His practice is focused on counseling and representing corporate and individual clients in

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Chris Murphy is an associate in the New York office of Crowell & Moring, and a member of the firm’s Antitrust and Competition and White Collar and Regulatory Enforcement practices. His practice is focused on counseling and representing corporate and individual clients in regulatory enforcement actions, government investigations, white collar criminal defense matters, and internal investigations. Chris counsels large companies in risk-assessment and regulatory compliance as well as individual clients on complex civil litigation issues. Chris represents corporations and executives in criminal and related regulatory and complex civil matters, including internal investigations and parallel proceedings by the U.S. Department of Justice, Securities and Exchange Commission, and State Attorneys Generals.

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