New York Prosecutor Seeks to Criminalize Unlicensed Crypto Operations in Landmark Regulatory Push
New York's top prosecutor just declared open season on unlicensed crypto firms—and the industry's watching closely.
Regulatory Crackdown Takes Shape
The Manhattan District Attorney's office is pushing legislation that would make operating a cryptocurrency business without a state license a criminal offense. Not just a fine. Not just a cease-and-desist. A crime. The move signals the most aggressive state-level stance against unregulated crypto operations to date, turning what's often treated as a civil regulatory matter into potential handcuffs.
Why This Changes Everything
For years, crypto companies danced around New York's notoriously tough BitLicense—some opting to block New York users entirely rather than navigate the costly, complex approval process. This new push flips the script. It moves enforcement from financial regulators to prosecutors, armed with subpoenas, search warrants, and the threat of jail time. Suddenly, 'geofencing' New York looks less like a business strategy and more like evidence.
The Compliance Hammer Drops
Legitimate firms with licenses are quietly cheering—this could finally level the playing field against offshore operations and fly-by-night exchanges. But privacy advocates and decentralization purists see a dangerous precedent: criminalizing software protocols and peer-to-peer networks that, by design, have no central operator to license.
New York isn't just raising the stakes—it's changing the game entirely. One prosecutor's office is betting that fear of prison will succeed where years of fines and warnings have failed. Whether it cleans up the industry or just drives innovation underground remains the billion-dollar question. After all, nothing says 'financial innovation' like threatening developers with jail time—Wall Street's old guard must be grinning over their morning coffee.
New York Prosecutor Warns Unlicensed Crypto ATMs Fuel Money Laundering
Bragg focused heavily on unlicensed crypto kiosks and ATMs, which he said often charge fees as high as 20% to convert cash into digital assets while asking few questions about the source of funds.
According to Bragg, these machines have become a preferred tool for criminals seeking to MOVE dirty money into crypto without interacting with regulated financial institutions.
“They know you’re laundering gun proceeds,” Bragg said during his remarks. “And they do it without necessarily asking you.”
While Manhattan prosecutors have successfully brought cases involving unlicensed bitcoin ATM operations and terror financing schemes, Bragg warned that current laws force investigators to rely too often on criminals making mistakes.
He argued that enforcement should not depend on someone accidentally touching the traditional banking system or boasting about their crimes online.
“We shouldn’t need someone to slip up,” he said. “There are people far wiser than that.”
Bragg proposed mandatory licensing and know-your-customer requirements for all crypto businesses operating in New York, backed by criminal penalties for violations.
Any company involved in transferring, trading, or facilitating the movement of digital assets should be subject to the same baseline oversight, he said.
“If you are operating a crypto business, you should be licensed,” Bragg said. “It’s that simple.”
If adopted, the measure WOULD make New York the 19th U.S. state to criminalize unlicensed crypto operations, according to Bragg.
Supporters argue such a move would strengthen consumer protections and give prosecutors clearer authority to pursue cases tied to fraud and money laundering.
New York Lawmakers Target “Pig-Butchering” Crypto Scams
During a question-and-answer session, concerns were raised about elderly New Yorkers who have lost life savings to so-called “pig-butchering” scams, where victims are groomed online before being convinced to send crypto to fraudulent addresses.
Bragg acknowledged the difficulty of recovering stolen funds and pointed to proposed legislation, including Senator Zellnor Myrie’s R.I.P.O.F.F. Act, as a way to expand recovery tools.
The push in New York comes as federal authorities also escalate enforcement.
Earlier this week, US prosecutors in Massachusetts sought the forfeiture of $200,000 in USDT linked to a romance-based crypto scam.
As reported, crypto scammers defrauded victims of at least $9.9 billion in 2024, marking one of the most significant financial crimes of the year.
