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Manhattan District Attorney Alvin Bragg called on New York lawmakers Wednesday to impose criminal penalties on unlicensed cryptocurrency operators, warning that regulatory gaps have enabled a “$51 billion criminal economy” exploiting digital asset platforms for money laundering and fraud.
Speaking at New York Law School, Bragg proposed mandatory licensing and know-your-customer requirements for all crypto businesses operating in the state, with particular focus on unlicensed ATMs and kiosks that charge fees up to 20% while asking few questions about fund sources.
Bragg focused on unlicensed crypto kiosks and automated teller machines (ATMs), which he said are being exploited for money laundering because they charge high fees and ask few questions about the source of funds.
According to Bragg, these machines can take up to 20% of cash converted to digital assets, creating an easy on‑ramp for criminals seeking to move illicit cash into crypto without interacting with regulated institutions.
“They know you’re laundering gun proceeds,” Bragg said, highlighting how criminals exploit gaps in current law and regulatory coverage.
He argued that enforcement should not depend on lawbreakers making mistakes, such as touching the traditional banking system or boasting online.
“We shouldn’t need someone to slip up. There are people far wiser than that,” Bragg said
Bragg proposed mandatory licensing and know-your-customer (KYC) requirements for all crypto businesses in New York, with criminal penalties for violations.
“If you are operating a crypto business, you should be licensed. It’s that simple,” he added.
If adopted, the legislation would make New York the 19th U.S. state to criminalize unlicensed crypto operations, reinforcing the importance of modernized New York crypto regulations.
During a Q&A session, Bragg addressed the growing issue of “pig-butchering” scams, in which victims are groomed online before being convinced to send cryptocurrency to fraudulent addresses, often draining life savings.
According to research, confirmed losses to crypto scams reached an estimated $9.9 billion in 2024, including romance and investment fraud.
Bragg also highlighted proposed legislation, including Senator Zellnor Myrie’s R.I.P.O.F.F. Act, aimed at giving authorities additional tools to recover stolen funds.
Supporters of strengthened New York crypto regulations argue that licensing requirements and criminal penalties will protect consumers and give prosecutors clearer authority to pursue fraud and money-laundering cases tied to digital assets.
The push for stricter New York crypto regulations comes amid federal enforcement targeting digital asset crime.
U.S. prosecutors in Massachusetts recently filed civil forfeiture actions to recover millions in cryptocurrency linked to romance-based scams, highlighting the cross-jurisdictional nature of these offenses.
Experts note that without clear regulatory standards, the proliferation of unlicensed platforms and ATMs can amplify risk for both consumers and the financial system.
Criminals exploit these gaps by moving illicit funds seamlessly across state and national borders, reinforcing the urgency of Bragg’s proposed measures.
Implementing mandatory licensing and KYC protocols would also standardize the way crypto businesses interact with regulators, improving transparency in New York’s growing digital asset ecosystem.
“Strong rules will create a safer market and give law enforcement the tools needed to prosecute bad actors efficiently,” said a compliance specialist familiar with the proposed legislation.
Bragg’s initiative underscores a wider national trend: as digital assets gain mainstream adoption, lawmakers and prosecutors are increasingly recognizing the necessity of proactive oversight.
Analysts suggest that New York crypto regulations, if passed, could set a benchmark for other states grappling with similar money-laundering and fraud challenges.
Finally, by closing regulatory gaps, New York aims to balance fostering innovation in the cryptocurrency sector with protecting consumers and deterring criminal exploitation.
The coming legislative sessions will determine how robustly the state addresses these high-stakes risks, potentially shaping the future of crypto governance across the United States.
