Manhattan District Attorney Alvin Bragg on urged New York lawmakers to expand criminal enforcement powers and technical capacity to address crypto-enabled crime. He tied the request to a claimed $51 billion annual illicit economy in the state and argued that gaps in licensing, KYC, and investigative tooling are creating avoidable exposure.
In practical terms, Bragg described a three-part package centered on criminalizing unlicensed crypto activity, tightening licensing and KYC expectations, and upgrading prosecutors’ blockchain forensics. The intent is to reduce loopholes for bad actors while improving the state’s ability to trace, seize, and return assets.
What Bragg is asking Albany to change
Bragg’s proposal would treat unlicensed crypto operations as a criminal offense and apply strict KYC requirements to crypto firms operating in New York. He singled out unlicensed crypto ATMs and similar operators as channels that can facilitate anonymized value transfers tied to proceeds from gun, drug, and fraud crimes.
He also framed the push as aligned with broader global risk signals, citing estimates that illicit crypto flows reached about $158 billion in 2025 and that roughly $2.7 billion was lost to hacks. In his view, those figures reinforce the case that enforcement needs both clearer legal hooks and the technical capability to follow on-chain movement in real time.
Bragg’s message was essentially that “stronger penalties without stronger tracing capacity won’t close the loop,” and that modern financial crime requires prosecutors to operate with modern tooling. In that context, he argued that unlicensed operators are “propping up a staggering $51 billion annual illicit economy within New York,” and that the state should close gaps that allow actors to evade prosecution.
For trading firms and corporate treasury teams, the directional implication is straightforward: a higher-control operating environment would raise the baseline for onboarding, monitoring, and counterparty assurance in New York. Exchanges, custodians, and any businesses touching New York users should expect tighter licensing checks and more demanding KYC workflows, which can increase friction but may also reduce certain categories of counterparty risk.
Enforcement tooling and recovery mechanics
On the investigative side, Bragg called for investment in transaction-tracing software and analytics platforms so prosecutors can convert blockchain transparency into usable evidence. The operational objective is to narrow the practical anonymity criminals rely on and improve the state’s ability to follow funds through complex on-chain paths.
He also backed victim-recovery-oriented legislation, including Senator Zellnor Myrie’s R.I.P.O.F.F. Act as a mechanism to help victims recover stolen crypto. Bragg positioned this as complementary to prevention: tighter licensing and KYC reduce abuse at the front door, while stronger recovery tools help when prevention fails.
From a market-structure standpoint, the next milestone is legislative response. Albany now has to weigh criminalization, expanded licensing/KYC obligations, and funding for technical tools, and those choices will shape compliance costs, custody practices, and how access to New York’s market is governed going forward.