Amid growing cryptocurrency crimes and threats, New York prosecutors claim that fines are no longer enough to curb illegal activities. As the city is moving to get stricter with digital asset regulations, officials have introduced new legislation called the CRYPTO Act that sees operating unlicensed businesses as illegal and offensive.
The proposed CRYPTO Act aims to bring stricter regulations to the digital asset industry by introducing imprisonment for serious violations. This underscores the broader shift in the city’s approach to crypto regulation.
NY CRYPTO Act to Criminalize Unregistered Platforms
According to the latest reports, New York prosecutors are urging lawmakers to establish stricter rules against crypto-related crimes. Manhattan District Attorney Alvin Bragg launched the CRYPTO Act proposal, arguing that operating an unlicensed crypto platform should be considered offensive and face a prison sentence rather than penalties. The DA believes that penalties will no longer be effective to tackle the growing threats. The statement read,
“Crypto is the go-to means for bad actors to move and hide the proceeds of crime…It is long past time for businesses that operate without a virtual currency license and flout due diligence requirements to face criminal penalties.”
Notably, the crypto bill would upgrade offences that are currently considered for fines into criminal charges. This will make violations subject to jail terms, in addition to increased penalties based on the scale of the crime.
For instance, businesses that process $1 million or more in crypto within a year could face charges ranging from a Class A misdemeanour to a Class C felony. If convicted of a Class C felony, the accused will have to face a prison sentence between five and 15 years. Nansen Research Analyst Nicolai Søndergaard noted,
“Nothing new is being outlawed. Crypto is not banned, DeFi is not banned, and users are not being targeted. The rules about who needs a license already exist. What changes is the consequence for ignoring those rules.”
The analyst also highlighted the need for clear regulatory guidelines before imposing strict restrictions. It could cause crypto companies and exchanges to be overly cautious and panic, making the situation even worse. 3
Is Crypto a Shadow Financial System?
The attorney stated that illegal actors are utilizing digital assets as a “shadow financial system.” He added that the expansion of the industry over the past few years has significantly influenced them. They move illicit funds using crypto, especially stablecoins.
This statement is further strengthened by a recent study that explained the growing thefts via crypto ATMs and growing laundering via digital assets. The FBI revealed that around $240 million was lost to crypto ATM hacks in the first quarter of 2025. They also highlighted the challenges in tracking the stolen assets as the hackers launder them using crypto and stablecoins. They stated,
“Cases started flowing my way where people were getting ripped off by cryptocurrency machines. You couldn’t get to anyone or get the money back.”
On Wednesday, Attorney Brad stated that crypto enforcement will be a key focus in his second term, alongside issues like other crimes. The CRYPTO Act proposal is an example. He warned that crypto criminals are taking advantage of the lack of clear regulations.
