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NY Bill Would Add New Criminal Penalties for Unlicensed Crypto Activity

By  |  March 2, 2026

A new bill introduced in the New York State Senate would impose additional criminal penalties for unlicensed crypto activity on top of existing civil and criminal liabilities. The measure was first unveiled in January by State Senator Zellnor Myrie (D-Brooklyn) and Manhattan District Attorney Alvin Bragg. It was subsequently introduced in the State Assembly by Assemblymember Grace Lee (D-Manhattan), underscoring New York City’s central role in the U.S. financial industry.

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    The proposed bill, the Cryptocurrency Regulation Yields Protections, Trust, and Oversight (CRYPTO) Act, would amend New York’s Financial Services Law to criminalize operating a virtual currency business without the required state license.

    Under New York law, entities must apply either for a BitLicense or a New York State banking charter to conduct virtual currency business within the state. The CRYPTO Act would add a new section to the New York Financial Services Law to define a “prohibited unlicensed virtual currency act” as conducting any virtual currency activity, such as receiving for transmission, transmitting, storing/holding/custody, buying or selling, or providing exchange services, without one or the other required license.

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    As a baseline, any such unlicensed activity would be classified as a Class A misdemeanor. But if the activity amounts to $25,000 or more within 30 days, or $250,000 or more within a year, it would be a Class E felony. If the amounts reach $50,000 and $500,000, respectively, it would be a Class D felony, and if $100,000 and $1 million a Class C felony.

    Any criminal penalties imposed for violating the prohibition would be in addition to any civil or criminal penalties already provided by law.

    Related: Big Banks Want Washington to Hit the Brakes on Crypto Banking Licenses 

    If enacted, the CRYPTO Act could significantly reshape the compliance and risk environment for cryptocurrency businesses with any connection to New York, according to an analysis by the Sheppard law firm. Among other things, it would convert operating without a required virtual currency license from a regulatory issue into a criminal offense. According to District Attorney Bragg, the bill would put crypto businesses on the same footing in the state as traditional financial services businesses, which already face criminal penalties for unlicensed money transmissions and related conduct.

    Although New York has a track record of tough crypto regulation, Senator Myrie notes that other states already criminalize unlicensed crypto activity, and that New York other states explicitly criminalize unlicensed crypto activity, arguing that New York lags behind, leaving consumers vulnerable to fraud, scams, and money laundering.

    Enactment of the proposed law is uncertain, however. It has already been a target of pushback from both the crypto and financial industries, who argue it could undermine New York’s economic competitiveness. The halting progress of the Clarity Act in Congress, moreover, illustrates how challenging it has become to enact major crypto regulation. In the home state of many powerful and politically connected financial service firms with cause to oppose the restrictions, that challenge could be steeper still.