Manhattan’s top prosecutor is pushing to make unlicensed crypto operations a crime, arguing that civil fines haven’t stopped a growing underground economy fueled by digital assets. On Thursday (Jan. 15, 2026), Manhattan District Attorney Alvin Bragg and New York State Senator Zellnor Myrie unveiled the CRYPTO Act — short for Cryptocurrency Regulation Yields Protections, Trust, and Oversight — which would convert many current civil violations into criminal offenses for virtual currency businesses that operate without a state license. “Crypto is the go-to means for bad actors to move and hide the proceeds of crime,” Bragg said, promoting the bill on social media and in public remarks. Under the proposal, penalties would be graduated based on the scale of activity: offenses now punished only with fines could carry criminal sanctions ranging from a Class A misdemeanor up to a Class C felony for businesses that handle $1 million or more in cryptocurrency within a 12‑month period. A Class C felony in New York can carry a sentence of five to 15 years in state prison, the DA’s office noted. Bragg framed the measure as closing an enforcement gap. He argued that the rapid expansion of crypto has fostered “a shadow financial system” that makes it easier for criminals to launder proceeds from guns, drugs, fraud and other crimes. Unlike federal law — which allows up to five years in prison for unlicensed money transmission — New York currently imposes only civil penalties on unlicensed crypto operators, even though 18 other states already criminalize unlicensed virtual-currency activity. Reactions from the industry and analysts warn of trade-offs. Nicolai Søndergaard, a research analyst at blockchain intelligence firm Nansen, told Decrypt that the CRYPTO Act doesn’t outlaw crypto or DeFi or target users, but increases consequences for ignoring licensing rules: “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.” He cautioned, however, that adding criminal penalties amid ambiguous regulatory boundaries could push firms to exit or avoid New York, likely making businesses more conservative and “more bank-like” as they seek compliance. The debate comes against a recent backdrop of criticism of New York’s regulatory regime. Introduced in 2015, the BitLicense requires crypto firms doing business in the state to meet stringent compliance standards and carry application and compliance costs that can range from about $5,000 to well over $100,000 — a regime that some say has stifled innovation. Last year, former New York City Mayor Eric Adams renewed calls to scrap the BitLicense at a major Bitcoin conference, arguing it’s a barrier to growth. Adams — who converted his early mayoral paychecks into Bitcoin and Ethereum in 2022 — has also been connected to controversy surrounding NYC Token, a Solana-based project he promoted that briefly hit a $600 million market cap before collapsing amid allegations that a linked wallet siphoned nearly $1 million in liquidity. The CRYPTO Act makes criminalization of unlicensed operations the center of a broader push by New York prosecutors to tighten oversight and deter the illicit use of crypto. Lawmakers will now weigh whether criminal penalties are the right lever to close enforcement gaps — and how that approach will reshape the state’s crypto landscape. Read more AI-generated news on: undefined/news

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