A New York lawmaker has introduced legislation that would allow state agencies to accept cryptocurrency payments, signaling growing political momentum for digital asset integration in public services.

Assembly Bill A7788, introduced by Assemblyman Clyde Vanel, seeks to amend state financial law to allow New York state agencies to accept cryptocurrencies as a form of payment.

It could permit state agencies to accept payments in Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH), according to the bill’s text.

According to the bill, state offices could authorize crypto payments for “fines, civil penalties, rent, rates, taxes, fees, charges, revenue, financial obligations or other amounts,” as well as penalties, special assessments and interest.

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Cryptocurrency legislation is becoming a focal point in New York, with Bill A7788 marking the state’s second crypto-focused legislation in a little over a month.

In March, New York introduced Bill A06515, aiming to establish criminal penalties to prevent cryptocurrency fraud and protect investors from rug pulls.

Crypto-focused legislation has gathered momentum since US President Donald Trump took office on Jan. 20, with Trump signaling during his campaign that his administration intends to make crypto policy a national priority, as well as making the US a global hub for blockchain innovation.

Related: Illinois Senate passes crypto bill to fight fraud and rug pulls

New York may mandate state “service fee” on crypto payments

If passed, the bill would mark a significant shift in how New York handles digital assets. It would allow state entities to integrate cryptocurrency into the payment infrastructure used for collecting public funds.

The proposal also includes a clause allowing the state to impose a service fee on those choosing to pay with crypto. According to the text, the state may require “a service fee not exceeding costs incurred by the state in connection with the cryptocurrency payment transaction.” This could include transaction costs or fees owed to crypto issuers.

Assembly Bill A7788 has been referred to the Assembly Committee for review and may advance to the state Senate as the next step.

New York’s legislation comes shortly after the state of Illinois passed a crypto bill to fight fraud and rug pulls, after the recent wave of insider schemes related to memecoins, Cointelegraph reported on April 11.

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Asset managers Osprey Funds and Grayscale Investments agreed to settle a lawsuit over alleged violations of Connecticut law in the advertising and promotion of Grayscale’s Bitcoin exchange-traded fund (ETF). 

According to an April 9 court filing, the parties agreed to settle the two-year-old case and are finalizing documentation and settlement terms. The filing noted that once those steps are completed, Osprey will withdraw its appeal.

“Soon after this appeal was filed, the parties reached a settlement of this case,” the motion stated. “It is expected that all these tasks can be done within 45 days, and it is uncertain whether a shorter extension would suffice.”

Details of the settlement have not been made public. 

Grayscale and Osprey reach settlement

The legal battle between the two firms started on Jan. 30, 2023, when Osprey filed a suit in the Connecticut Superior Court. Osprey claimed it was Grayscale’s only competitor in the over-the-counter Bitcoin (BTC) trust market and that Grayscale had maintained its market share through deceit. 

Osprey claimed Grayscale promoted its Grayscale Bitcoin Trust (GBTC) as a means to access a spot Bitcoin ETF through a conversion. Osprey argued that the conversion was presented as a certainty, despite regulatory uncertainty at the time.

Grayscale’s application to convert GBTC into a spot ETF was approved by the US Securities and Exchange Commission in January 2024.

An August 2023 ruling compelled the SEC to reconsider its rejection of Grayscale’s application to convert the fund into an ETF. 

The SEC’s approval allowed GBTC to transition into a spot ETF and begin trading on the NYSE Arca exchange.

Related: Crypto ETPs shed $240M last week amid US trade tariffs — CoinShares

Lawsuit settlement follows Osprey appeal 

On Feb. 7, Judge Mark Gould sided with Grayscale, ruling that Osprey’s claims against the asset manager were exempted from the Connecticut Unfair Trade Practices Act. 

Osprey responded by filing a motion for reargument on Feb. 10. The fund claimed that Gould’s ruling came “before the close of discovery,” which is the formal evidence-gathering phase of a lawsuit.

The fund claimed that the ruling overlooked the differences between how the Federal Trade Commission and Connecticut courts treat deceptive advertising. 

The settlement ended one of the more prominent legal clashes among crypto asset managers competing for early ETF dominance. Grayscale’s GBTC remains one of the largest Bitcoin investment vehicles in the United States.

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Crypto-critical US Senator Elizabeth Warren has led six Senate Democrats in urging the Department of Justice to reverse its decision to terminate its crypto investigations and prosecutions division.

In an April 10 letter to Deputy Attorney General Todd Blanche, the Senators said the decision to disband the department’s National Cryptocurrency Enforcement Team was a “grave mistake” that would support “sanctions evasion, drug trafficking, scams, and child sexual exploitation.”

Senators Richard Durbin, Mazie Hirono, Sheldon Whitehouse, Christopher Coons and Richard Blumenthal signed the letter in addition to Warren.

On April 7, Blanche shuttered the DOJ’s crypto enforcement team, saying in a memo that “The Department of Justice is not a digital assets regulator.”

The senators claim that the decision gave a “free pass to cryptocurrency money launderers” and claimed that crypto mixing services — used to obfuscate blockchain transactions — are “go-to tools for cybercriminals.” 

“It makes no sense for DOJ to announce a hands-off approach to tools that are being used to support such terrible crimes,” the letter said.

The senators also questioned why the Justice Department  had decided not to prosecute a “host of crimes involving digital assets, including violations of the Bank Secrecy Act.”

They claimed that this creates a “systemic vulnerability in the digital assets sector,” which “drug traffickers, terrorists, fraudsters, and adversaries” will exploit on a large scale. 

The lawmakers requested a staff-level briefing no later than May 1, providing “detailed information on the rationale behind these decisions.” 

Targeting Trump family crypto endeavors 

The letter also took a swipe at the Trump family’s crypto projects, suggesting potential conflicts of interest.

Related: SafeMoon boss cites DOJ’s nixed crypto unit in latest bid to toss suit

A press release accompanying the letter stated that the senators are raising concerns about the “potential connections” between the DOJ’s actions and the crypto ventures of President Donald Trump and his family.

The Trumps have an interest in and have backed the crypto platform World Liberty Financial along with its token. The platform is also planning to launch a stablecoin while President Trump’s sons, Eric Trump and Donald Trump Jr., are working to launch a crypto-mining company called American Bitcoin.

“Your decisions give rise to concerns that President Trump’s interest in selling his cryptocurrency may be the reason for easing law enforcement scrutiny,” the Democrats stated.  

In a memo announcing the crypto enforcement team’s disbandment, Blanche accused the Biden administration of using the Justice Department to “pursue a reckless strategy of regulation by prosecution.”

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