{"id":39782,"date":"2026-10-01T11:47:05","date_gmt":"2026-10-01T09:47:05","guid":{"rendered":"https:\/\/crystalintelligence.com\/?p=39782"},"modified":"2026-10-01T13:09:09","modified_gmt":"2026-10-01T11:09:09","slug":"operating-in-ny-what-crypto-compliance-teams-need-to-know","status":"publish","type":"post","link":"https:\/\/crystalintelligence.com\/thought-leadership\/operating-in-ny-what-crypto-compliance-teams-need-to-know\/","title":{"rendered":"Operating in New York: key facts for crypto compliance teams"},"content":{"rendered":"<p><strong>By Nick Smart, Chief Intelligence Officer at Crystal<\/strong><\/p>\n<p><span data-contrast=\"auto\">New York has one of the most developed crypto regulatory environments in the US, yet significant unlicensed activity persists alongside it. Crystal Intelligence\u2019s research identified 62 cash-to-crypto services operating in New York without the required licenses, including 48 that offer physical cash transactions. Some also support privacy-focused assets, creating additional challenges for businesses attempting to understand their exposure.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559737&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:279}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Crystal&#8217;s recent webinar examined what this means for compliance teams operating in one of the world\u2019s most closely watched crypto markets. Moderated by <\/span><a href=\"https:\/\/www.linkedin.com\/in\/smartnss\/\"><span data-contrast=\"none\">Nick Smart<\/span><\/a><span data-contrast=\"auto\">, Chief Intelligence Officer at Crystal, the discussion brought together <\/span><a href=\"https:\/\/www.linkedin.com\/in\/daniellesl\/\"><span data-contrast=\"none\">Daniella Labarbera<\/span><\/a><span data-contrast=\"auto\">, VP of Business Development and Sales for North America at Sumsub; <\/span><a href=\"https:\/\/www.linkedin.com\/in\/jrcollins-wood\/\"><span data-contrast=\"none\">Johanna Collins-Wood<\/span><\/a><span data-contrast=\"auto\">, General Counsel and Head of Compliance for US Asset Management at Bitwise Asset Management; and <\/span><a href=\"https:\/\/www.linkedin.com\/in\/rasmussenryan\/\"><span data-contrast=\"none\">Ryan Rasmussen<\/span><\/a><span data-contrast=\"auto\">, Head of Research at Bitwise.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559737&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:279}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The discussion explored the relationship between regulated and unlicensed activity, the growing importance of counterparty due diligence, and the influence of regulatory expectations on institutional participation in crypto.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559737&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:279}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Only got a New York minute to spare? Catch the compact webinar <\/span><span data-contrast=\"auto\">summary <\/span><a href=\"https:\/\/youtu.be\/4kRqKjjHXc0?si=f04mhXKqy81jX9it\"><span data-contrast=\"none\">here<\/span><\/a><span data-contrast=\"auto\">.<\/span><\/p>\n<h2 aria-level=\"2\">Key takeaways<\/h2>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">KYB is becoming continuous.<\/span><\/b><span data-contrast=\"auto\"> Establishing a business\u2019s identity and regulatory status at onboarding is only the beginning. Changes in ownership, licensing, and business activity require ongoing monitoring.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Licensing must match the activity.<\/span><\/b><span data-contrast=\"auto\"> A company can hold legitimate regulatory credentials without being authorized to provide every service it offers.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Compliance influences institutional access.<\/span><\/b><span data-contrast=\"auto\"> Regulatory standing, qualified custody and exchange support can determine whether an asset is eligible for institutional investment products.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"4\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Self-custody changes where obligations sit.<\/span><\/b><span data-contrast=\"auto\"> The panel expects greater regulatory attention on businesses facilitating transactions rather than individual wallet addresses.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"5\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Compliance needs to work alongside businesses.<\/span><\/b><span data-contrast=\"auto\"> Effective programs require operationally realistic policies and close collaboration between legal, compliance, and commercial teams.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<h2 aria-level=\"2\">How big is New York\u2019s unlicensed crypto economy under the BitLicense?<\/h2>\n<p><span data-contrast=\"auto\">New York provides an important case study because of the maturity of its regulatory framework. Despite its established licensing requirements, Crystal&#8217;s research identified 62 cash-to-crypto services* operating without appropriate authorization. Of those, 48 offered physical cash transactions, while many maintained operations across other major cities and financial centers.<\/span><\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone size-large wp-image-39793\" src=\"https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/webinar-slide-01-1024x576.png\" alt=\"\" width=\"1024\" height=\"576\" srcset=\"https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/webinar-slide-01-1024x576.png 1024w, https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/webinar-slide-01-300x169.png 300w, https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/webinar-slide-01-768x432.png 768w, https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/webinar-slide-01-1536x864.png 1536w, https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/webinar-slide-01-2048x1152.png 2048w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><em><span class=\"TextRun SCXW37286208 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW37286208 BCX0\">Above: <\/span><span class=\"NormalTextRun SCXW37286208 BCX0\">New York cash-for-crypto figures labeled unlicensed: 63 services <\/span><span class=\"NormalTextRun SCXW37286208 BCX0\">(<\/span><span class=\"NormalTextRun SCXW37286208 BCX0\">live-accurate, point-in-time count), 1,156 listings, 48 taking physical cash, $593M losses, 443 cities, 85% London overlap. <\/span><span class=\"NormalTextRun SCXW37286208 BCX0\">Source: Crystal Intelligence.<\/span><\/span><\/em><\/p>\n<p><span data-contrast=\"auto\">The research also identified approximately $593M in crypto fraud losses in New York, representing a 58% year-over-year increase. Although these figures describe different aspects of the market, together they illustrate the financial crime environment in which regulated institutions operate.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Privacy-focused assets introduce another dimension. Several of the identified services supported Monero, Dash, or Zcash, while Crystal&#8217;s monitoring revealed a decline in Monero holdings among these providers over a six-month period. During the webinar, Nick suggested that increased cash-to-Monero conversions could explain some of this activity, although the international operations of these businesses make it difficult to attribute the trend specifically to New York.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559737&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:279}\">\u00a0<\/span><\/p>\n<p><img decoding=\"async\" class=\"alignnone size-large wp-image-39794 lazyload\" data-src=\"https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/webinar-slide-02-1024x576.png\" alt=\"\" width=\"1024\" height=\"576\" data-srcset=\"https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/webinar-slide-02-1024x576.png 1024w, https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/webinar-slide-02-300x169.png 300w, https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/webinar-slide-02-768x432.png 768w, https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/webinar-slide-02-1536x864.png 1536w, https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/webinar-slide-02-2048x1152.png 2048w\" data-sizes=\"(max-width: 1024px) 100vw, 1024px\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1024px; --smush-placeholder-aspect-ratio: 1024\/576;\" \/><\/p>\n<p><em><span class=\"NormalTextRun SCXW241194840 BCX0\">Above:<\/span><span class=\"NormalTextRun SCXW241194840 BCX0\"> Chart showing <\/span><span class=\"NormalTextRun SCXW241194840 BCX0\">privacy-coin cash desks in New York<\/span><span class=\"NormalTextRun SCXW241194840 BCX0\">: bi-directional<\/span><span class=\"NormalTextRun SCXW241194840 BCX0\"> conversion counts for Monero, Dash and Zcash\u00a0<\/span><span class=\"NormalTextRun SCXW241194840 BCX0\">across 62 exchangers, with a $10,000 <\/span><span class=\"NormalTextRun SCXW241194840 BCX0\">minimum<\/span><span class=\"NormalTextRun SCXW241194840 BCX0\"> ticket. <\/span><span class=\"NormalTextRun SCXW241194840 BCX0\">Source: Crystal Intelligence.<\/span><\/em><\/p>\n<p><span data-contrast=\"auto\">The concern for regulated businesses is how these services interact with the wider financial system. Unlicensed operators still require liquidity and access to crypto, potentially bringing them into contact with regulated exchanges and other financial institutions. Understanding those relationships by <\/span><a href=\"https:\/\/crystalintelligence.com\/blockchain-analytics-tool\/\"><span data-contrast=\"none\">tracing how funds move between them<\/span><\/a><span data-contrast=\"auto\"> is becoming an increasingly important compliance responsibility.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559737&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:279}\">\u00a0<\/span><\/p>\n<p><i><span data-contrast=\"auto\">*62 in historical total as of late September 2026.<\/span><\/i><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559737&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:279}\">\u00a0<\/span><\/p>\n<h2 aria-level=\"2\">Why does KYB need to go beyond onboarding?<\/h2>\n<p><span data-contrast=\"auto\">Daniella identified Know Your Business (KYB) as an area facing increasing regulatory pressure. While Know Your Customer (KYC) has received considerable attention across the crypto industry, the ability to identify and continuously assess corporate counterparties is becoming equally important.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Traditional KYB establishes whether an entity legally exists, remains in good standing and has identifiable ultimate beneficial owners. However, Daniella described a shift toward perpetual or reusable KYB, involving continuous, event-driven rescreening throughout the customer relationship.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">This reflects the reality that businesses change after onboarding. Their ownership structures may evolve, licenses can expire, and new activities may be introduced that fall outside their original authorization. A counterparty assessed as relatively low risk when the relationship began may therefore present a different risk profile several months later.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">For compliance teams, this means examining whether declared business activities align with observed operations and whether regulatory permissions continue to cover the services provided. The initial onboarding decision becomes the starting point for an ongoing assessment rather than the conclusion of due diligence.<\/span><\/p>\n<h2 aria-level=\"2\">Why is having a Bitlicense not enough?<\/h2>\n<p><span data-contrast=\"auto\">Johanna explained that licensing assessments are particularly important in the US, where regulatory authorization depends heavily on the activity a business conducts. Before establishing partnerships or counterparty relationships, Bitwise reviews formation documents, regulatory records, and licensing information, sometimes using external assistance to support its assessment.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">A money services business registration, for example, is not equivalent to holding a New York <\/span><a href=\"https:\/\/www.dfs.ny.gov\/apps_and_licensing\/virtual_currency_businesses\"><span data-contrast=\"none\">BitLicense<\/span><\/a><span data-contrast=\"auto\">. Similarly, state money transmission licenses do not automatically authorize activities such as custody. A company may therefore be legitimately registered without possessing the permissions required for a particular service.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">This creates additional complexity for businesses operating across multiple US states, where regulatory requirements and licensing arrangements can differ. Compliance teams must establish which activities their counterparties conduct, where those activities take place and whether the relevant authorizations cover them.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The discussion also reinforced the importance of reviewing these relationships as businesses evolve. A company that originally provided one service may subsequently introduce additional products or expand into new markets, making ongoing verification essential.<\/span><\/p>\n<h2 aria-level=\"2\">How does regulation influence institutional investment?<span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559737&quot;:0,&quot;335559738&quot;:160,&quot;335559739&quot;:80,&quot;335559740&quot;:279}\">\u00a0<\/span><\/h2>\n<p><span data-contrast=\"auto\">Regulatory compliance also affects which crypto assets institutional investors can access. Ryan explained that investors increasingly consider an asset\u2019s regulatory position alongside traditional investment criteria, with particular attention to where it can be traded, how it can be custodied and whether its associated project has faced enforcement action.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The Bitwise 10 Large Cap Crypto Index provides an example. In addition to eligibility criteria such as liquidity and market capitalization, assets must be supported by specified US-regulated exchanges and qualified institutional custodians. These requirements can influence whether an asset is eligible for inclusion before an investment decision is made.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559737&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:279}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Privacy coins illustrate the challenges involved. Ryan acknowledged that privacy has been an important feature of cryptocurrency since its earliest development, with continuing interest in technologies such as Monero and Zcash. However, regulatory uncertainty surrounding privacy-focused assets means they are excluded from certain Bitwise public funds.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">This creates a commercial consideration for crypto projects and service providers. Regulatory standing and access to compliant infrastructure can influence institutional participation, making compliance an important factor in how businesses develop their products and approach potential partners.<\/span><\/p>\n<h2 aria-level=\"2\">How can New York crypto compliance become a foundation for growth?<\/h2>\n<p><span data-contrast=\"auto\">The panel also explored how attitudes toward compliance have changed as the cryptocurrency industry has matured. Nick recalled the historical description of compliance officers as &#8220;General No,&#8221; reflecting the perception that their primary responsibility was to prevent businesses from taking risks.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Daniella argued that successful businesses increasingly recognize compliance as an integral part of their growth strategy. Organizations that establish robust processes early are better positioned to adapt as regulatory expectations evolve, while those treating compliance as an obstacle may encounter difficulties when attempting to scale.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Johanna described a similar shift across the industry. Having worked as a crypto lawyer since 2017, she has observed businesses move away from the assumption that new technology necessarily operates outside established financial regulation. The discussion now focuses more heavily on determining how existing frameworks apply to new products and where further regulatory clarification is required.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Ryan highlighted the continuing influence of FTX on institutional perceptions of cryptocurrency. Although its <\/span><a href=\"https:\/\/crystalintelligence.com\/crypto-regulations\/november-2022-update-on-crypto-regulatory-affairs\/#:~:text=FTX%20comes%20under,in%20the%20Caribbean.\"><span data-contrast=\"none\">collapse<\/span><\/a><span data-contrast=\"auto\"> occurred in 2022, it remains relevant to investors who may have spent the intervening years focusing on other markets. Businesses seeking institutional partnerships must therefore recognize that confidence in their governance and compliance arrangements can influence commercial decisions.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">When asked whether tighter regulation could have prevented FTX, Johanna cautioned against assuming that additional rules can eliminate deliberate fraud. Regulation provides important oversight and enforcement mechanisms, but businesses must also establish the internal controls and accountability necessary to operate responsibly.<\/span><\/p>\n<h2 aria-level=\"2\">Can self-custodial wallets be regulated?<\/h2>\n<p><span data-contrast=\"auto\">An audience question introduced another challenge: managing cross-border B2B payments involving self-custodial wallets, particularly in emerging markets.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The panel broadly agreed that regulating individual wallets directly presents significant practical difficulties. Unlike a traditional financial institution, an individual wallet may have no identifiable business or intermediary for regulators to supervise.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Daniella suggested that regulatory attention is therefore more likely to concentrate on the businesses facilitating transactions. She described these as regulatory &#8220;choke points,&#8221; where obligations involving wallet screening, counterparty verification, and <\/span><a href=\"https:\/\/crystalintelligence.com\/crypto-transaction-monitoring-for-banks\/\"><span data-contrast=\"none\">transaction monitoring<\/span><\/a><span data-contrast=\"auto\"> can be applied.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Johanna agreed that businesses that conduct activities involving self-custodial wallets offer more practical opportunities for supervision. Companies that facilitate transfers or convert digital assets can be subject to registration and licensing requirements, depending on their activities and jurisdiction.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559737&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:279}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Ryan also highlighted the development of regulated platforms offering self-custodial capabilities. This could create additional opportunities for institutional adoption while allowing businesses to maintain appropriate compliance arrangements.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">For compliance teams, the distinction is important. Self-custody does not automatically remove compliance responsibilities, but it can change which parties are responsible and how those obligations are fulfilled. Understanding the structure of the transactions and the businesses involved remains essential.<\/span><\/p>\n<h2 aria-level=\"2\">How should firms prepare for changes to New York crypto regulation?<\/h2>\n<p><span data-contrast=\"auto\">The discussion also addressed the evolving US regulatory environment and the uncertainty surrounding comprehensive federal crypto legislation.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559737&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:279}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Johanna explained that regulatory development continues even when major legislation remains unresolved. Agencies including the SEC and CFTC can introduce proposals and regulatory measures that affect the industry, while businesses have opportunities to participate in consultations and respond to proposed rules.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">For companies operating in New York and elsewhere in the US, this creates a need for <\/span><a href=\"https:\/\/crystalintelligence.com\/crypto-compliance-solution\/\"><span data-contrast=\"none\">compliance programs<\/span><\/a><span data-contrast=\"auto\"> that can accommodate change. Businesses must remain informed about regulatory developments while ensuring their existing policies continue to reflect their activities and obligations.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The panel&#8217;s practical recommendations reflected this emphasis on adaptability. Daniella encouraged businesses to approach compliance proactively and thoroughly, while Johanna recommended reviewing compliance manuals directly with business teams to ensure documented procedures work in practice.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Ryan emphasized the importance of investing in experienced legal and compliance professionals. At Bitwise, close collaboration between these teams and the wider business helps inform product development, partnership assessments and commercial decisions.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Together, these recommendations highlight the importance of integrating compliance into everyday operations rather than treating it as a separate function that reviews decisions after they have been made.<\/span><\/p>\n<h2 aria-level=\"2\">Frequently asked questions<span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:160,&quot;335559739&quot;:80}\">\u00a0<\/span><\/h2>\n<h3 aria-level=\"3\"><span data-contrast=\"none\">What should firms check when conducting KYB on a crypto business?<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:160,&quot;335559739&quot;:80}\">\u00a0<\/span><\/h3>\n<p><span data-contrast=\"auto\">KYB should establish the business\u2019s legal existence, ownership, and regulatory standing. Ongoing monitoring should also identify changes in ownership, licensing, and business activities that could affect its risk profile.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<h3 aria-level=\"3\"><span data-contrast=\"none\">Does having a US crypto license authorize every crypto activity?<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:160,&quot;335559739&quot;:80}\">\u00a0<\/span><\/h3>\n<p><span data-contrast=\"auto\">No. Regulatory requirements depend on the activity being conducted and the relevant jurisdiction. Compliance teams need to verify that a counterparty holds the appropriate authorizations for the specific services it provides.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<h3 aria-level=\"3\"><span data-contrast=\"none\">Why does regulatory status matter when assessing a crypto asset?<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:160,&quot;335559739&quot;:80}\">\u00a0<\/span><\/h3>\n<p><span data-contrast=\"auto\">Institutional investors may consider whether an asset is supported by regulated exchanges and qualified custodians, as well as its regulatory and enforcement history. These considerations can influence eligibility for institutional investment products.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<h3 aria-level=\"3\"><span data-contrast=\"none\">Are self-custodial wallets exempt from compliance requirements?<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:160,&quot;335559739&quot;:80}\">\u00a0<\/span><\/h3>\n<p><span data-contrast=\"auto\">Self-custody does not automatically remove compliance obligations. Depending on the applicable regulatory framework, businesses facilitating or originating transactions involving self-custodial wallets may have screening, verification and other compliance responsibilities.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<h3 aria-level=\"3\"><span data-contrast=\"none\">What does this mean for crypto compliance teams?<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:160,&quot;335559739&quot;:80}\">\u00a0<\/span><\/h3>\n<p><span data-contrast=\"auto\">New York demonstrates the complexity of operating in a mature crypto market where regulated institutions and unlicensed services exist within the same wider ecosystem. Crystal&#8217;s New York Regulation &amp; Risk Report 2026 examines the financial crime risks associated with New York\u2019s crypto market, including unlicensed cash-to-crypto services, fraud exposure, and privacy-focused assets.<\/span><\/p>\n<p><img decoding=\"async\" class=\"alignnone size-large wp-image-39795 lazyload\" data-src=\"https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/nick-smart-quote-v2-3200x1360-1-1024x435.png\" alt=\"Crystal CIO, Nick Smart, says compliance &amp; credibility are inextricably intertwined.\" width=\"1024\" height=\"435\" data-srcset=\"https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/nick-smart-quote-v2-3200x1360-1-1024x435.png 1024w, https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/nick-smart-quote-v2-3200x1360-1-300x128.png 300w, https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/nick-smart-quote-v2-3200x1360-1-768x326.png 768w, https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/nick-smart-quote-v2-3200x1360-1-1536x653.png 1536w, https:\/\/crystalintelligence.com\/rohirov\/2026\/10\/nick-smart-quote-v2-3200x1360-1-2048x870.png 2048w\" data-sizes=\"(max-width: 1024px) 100vw, 1024px\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1024px; --smush-placeholder-aspect-ratio: 1024\/435;\" \/><\/p>\n<p><span data-contrast=\"auto\">For compliance teams, understanding that environment requires continued attention to counterparties, licensing arrangements, and the infrastructure supporting individual assets.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559737&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:279}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The webinar highlighted a consistent direction across these challenges. Counterparty assessments need to continue beyond onboarding, licensing checks must reflect actual business activities, and compliance processes need to evolve alongside new technologies and regulatory expectations.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">As institutional participation develops, businesses also face growing expectations from potential partners and customers. The ability to demonstrate credible, operationally effective compliance arrangements can influence access to investment, partnerships, and new markets.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Watch the full webinar <\/span><a href=\"https:\/\/www.youtube.com\/embed\/xKRw-FvHbcM?si=3-SCickJ1YKOFIxt%22\"><span data-contrast=\"none\">here<\/span><\/a><span data-contrast=\"auto\">.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559737&quot;:0,&quot;335559738&quot;:240,&quot;335559739&quot;:240,&quot;335559740&quot;:279}\">\u00a0<\/span><\/p>\n<p><b><i><span data-contrast=\"auto\">Disclaimer<\/span><\/i><\/b><i><span data-contrast=\"auto\">: Views expressed by panelists are their own and do not necessarily reflect the position of Crystal Intelligence. This summary is for informational purposes only and is not legal, compliance, financial or investment advice.<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Nick Smart, Chief Intelligence Officer at Crystal New York has one of the most developed crypto regulatory environments in the US, yet significant unlicensed activity persists alongside it. Crystal Intelligence\u2019s research identified 62 cash-to-crypto services operating in New York without the required licenses, including 48 that offer physical cash transactions. Some also support privacy-focused [&hellip;]<\/p>\n","protected":false},"author":28,"featured_media":39785,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","inline_featured_image":false,"footnotes":""},"categories":[15],"tags":[],"class_list":["post-39782","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-thought-leadership"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.6 (Yoast SEO v28.5) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>New York Crypto Compliance Regulations Explained<\/title>\n<meta name=\"description\" content=\"Experts from Crystal, Bitwise and Sumsub discuss New York crypto compliance, licensing, KYB, self-custody and increasing regulation.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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