Manhattan District Attorney Alvin Bragg and State Sen. Zellnor Myrie proposed new legislation last week that will put the screws on unlicensed cryptocurrency businesses in New York, as the state of New York was debating legalizing online casino gambling.
The proposed Cryptocurrency Regulation Yields Protections, Trust, and Oversight Act, or the CRYPTO Act, as presented on January 16, would, in effect, make it a criminal act to operate a digital currency business unless the relevant licensing has been attained by the platform via the New York State Department of Financial Services.
Under the existing legislation, civil penalties are the only punishment that unlicensed operators receive. The bill would criminalize operating an unlicensed money transmission business transmitting more than one million dollars and would be punishable by as much as 15 years in prison.
The Crypto-Casino Connection in New York
The CRYPTO Act goes hand in hand with the renewed attempts to legalize online casino gaming in New York. On January 7, State Sen. Joseph Addabbo Jr. reintroduced Senate Bill 2614 that authorized licensed casinos, tribal operators, video lottery facilities, and existing sports betting operators to offer online slots, table games, and poker.
This shows a paradox in the New York gambling policy:
The issue: NYC is already betting online, but it is using unregulated and offshore casinos (where cryptocurrency is frequently used).
The gap: As legislators discuss how to establish regulated, safe online casinos, New York is losing billions of tax revenue and consumer rights protections.
The consequence: The money ends up in the hands of the neighboring states and unregulated markets as opposed to remaining in New York.
The Offshore Casino Problem
There is already a large number of New Yorkers who bet online using unregulated offshore sites. They are typically in locations based on jurisdictions such as Curacao, Costa Rica, or Anjouan, where regulatory bodies are not as strict as in the United States. Lots of them accept cryptocurrency and enable users to make transactions without the use of traditional forms of identification.
DA Alvin Bragg prosecutes unlicensed New York cryptocurrency ATMs. According to him, criminals often use such machines and convert cash to digital money, thus helping them hide illegal profits from violent crimes or even fund terrorism. He has already received cases in his office, one of which involves a $5 million Bitcoin machine associated with foreign terrorism.
In 2024, an analysis by Chainalysis estimated that some $51 billion worth of cryptocurrency was sent to addresses associated with criminal activity.
Casino Regulation vs. Crypto Anonymity
The concurrence between online casino proposals and the enforcement initiative of New York regarding illegal crypto business highlights the difficulties in regulation for lawmakers. Online casinos would have to adopt identity validation practices and anti-money laundering policies, such as KYC.
On the other hand, other offshore gambling sites that accept cryptocurrency advertise easy registration with minimal checks. These no KYC casinos are a niche part of the online gambling world. They are attractive to users who prefer faster and more private transactions. These places usually accept blockchain as payment and are authorized abroad.
These platforms can be licensed in their locations, but they are violating the state of New York laws by serving New Yorkers. The CRYPTO Act would grant prosecutors additional ability to pursue these unlicensed operators, and also the services that enable people to access them.
New York’s BitLicense Framework
Since a BitLicense system was introduced in 2015, these regulations made the state of New York have some of the strictest cryptocurrency regulations in the country. It is also stipulated in the framework that the businesses that have engaged in the digital currency operations should be given access to the system to establish the norms of consumer protection, cybersecurity, and money laundering.
Since its introduction, the framework has been criticized. Since that time, other crypto companies, such as Shapeshift and Kraken, have pulled out of the New York market on the pretext of regulatory pressure. However, recently, other businesses are making attempts to obtain state licenses in order to work in New York.
Currently, the platforms that share, transfer, or store cryptocurrency without the corresponding permission are fined civilly. The CRYPTO Act would criminalize the activities of the unlicensed virtual currency businesses in New York, becoming the 19th state to do so.
The Sweepstakes Casino Precedent
The recent action of New York against sweepstakes casinos demonstrates how the state could control new types of online gambling. In December 2025, Governor Kathy Hochul enacted a bill that prohibited such websites, which used a two-currency system to offer games similar to a casino, and were not legally classified as gambling.
The ban, which will begin at the beginning of 2026, is due to the increasing concern of the state over the exploitative activity by operators due to legal loopholes. This is one of the steps in the lawmakers’ bigger plan to one day have a safe, legalized, and regulated system of online gambling in New York.
What’s Next for Both Bills
The future of the CRYPTO Act and the trend towards legalizing online casinos in New York is still unpredictable. There have been several failures, as former online gambling bills have failed due to opposition by the labor groups against job loss at the physical casinos; the current proposals have provisions that will address the needs of the workers.
On the same note, the CRYPTO Act needs to be passed through both houses of the legislature, and it has to be signed by the governor to be declared a law. If it does, it would make it significantly riskier to operate there as an unlicensed crypto business in New York.
These discussions indicate that New York is struggling to cope with rapidly evolving digital markets, retain the safety of consumers, and ensure compliance with the rules.
The trend is clear: to participate in online gambling or to use cryptocurrency, you will have to comply with the rules of New York.
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