New York is about to take action: Unlicensed crypto businesses face criminal penalties, as the 19th state joins the regulatory crackdown

Manhattan District Attorney Alvin Bragg recently urged New York State lawmakers to criminalize unlicensed crypto businesses. According to the latest reports, Bragg warned that a criminal economy worth $51 billion is thriving by exploiting regulatory blind spots, with criminals using unlicensed crypto channels to launder funds from guns, drugs, and fraud. If the proposal passes, New York will become the 19th state in the U.S. to criminalize unlicensed crypto operations, marking a move toward stricter crypto regulation in the country.

Policy Core Content

Bragg’s proposal includes three key elements:

• All crypto businesses must obtain mandatory licenses
• Crypto service providers must comply with Know Your Customer (KYC) regulations
• Violators will face criminal liability

Of particular note, Bragg targets unlicensed crypto ATMs. These machines often charge fees of up to 20% to convert cash into digital assets, serving as a convenient channel for money laundering. In Bragg’s view, these high-fee, unlicensed services are a critical infrastructure of the criminal economy.

Why New York is Taking Action

From a regulatory perspective, New York’s move reflects an upgrade in the understanding of crypto regulation across U.S. states. Currently, 18 states have criminalized unlicensed crypto operations. As a global financial hub, New York’s legislative actions often set an example for others.

Bragg’s warning points to a real dilemma: in areas where federal regulation has not yet fully covered, state-level regulation becomes an important means of filling the gaps. The $51 billion figure, while coming from the prosecutor’s statement, reflects the actual scale of unlicensed crypto businesses. The fee rate of up to 20% also indicates the profit margins in this market, attracting illicit actors.

Potential Impacts

If the proposal is approved, it could trigger several chain reactions:

Crackdown on unlicensed crypto services: As a financial center, New York’s legislation could pressure nationwide unlicensed crypto businesses. Many unlicensed providers may face compliance requirements or exit the market.

Opportunities for compliant companies: The mandatory licensing requirement could expand the market for compliant crypto service providers, forcing users to shift to licensed providers.

Industry-wide signals: This reflects a shift in U.S. regulation from “how to regulate crypto” to “how to combat illegal crypto activities.”

Summary

New York’s proposal represents a new phase in U.S. crypto regulation. The shift from “how to regulate” to “how to crack down” indicates increasing regulatory focus on crypto crime economies. The $51 billion scale serves as a warning that unlicensed crypto businesses have become a major channel for money laundering. As the 19th state to criminalize such activities, New York’s example is noteworthy. For the industry, this means increased compliance costs, but in the long term, such regulatory pressure is also pushing the industry toward more standardized development.