New Jersey lawmakers have proposed a new bill aimed at regulating cryptos. If the new regulation is approved, all crypto-related companies will have to obtain a special license in order to operate in the state.
The new proposed bill known as the Digital Assets and Technology Blockchain Act, was presented on February 20 by Assemblywoman Yvonne López, putting forth a proposal to license any entity looking to provide digital asset trading, storage, purchase, sales, exchange, borrowing/lending or issuance services. The N.J. Department of Banking and Insurance would be tasked with overseeing this license and regulating businesses.
The bill also requires crypto companies to disclose their terms and conditions for consumer accounts. Anyone applying would need to provide a schedule of fees, and any information regarding the risks of investing in digital assets.
The bill also requires compulsory registration of crypto-related companies and the creation of user protections (crypto companies must disclose to the State of New Jersey’s Department of Banking and Insurance their legal names, anti-money laundering and anti-terrorist financing policies, and their licenses).
The term “digital asset” encompasses virtual currencies, digital securities and other assets, including anything with a transaction history recorded on “a distributed, digital ledger or digital data structure in which consensus is achieved through a mathematically verifiable process.”
Under the terms of the proposed bill, individuals cannot conduct any business activity around digital assets unless they either have a license or have a reciprocal license in another state.
“We must take steps to protect consumers looking to invest in cryptocurrency, while also allowing the sector to continue to develop and expand in New Jersey,” Lopez said.
Individuals who fail to secure the license or do not have a pending license application will be fined $500 per day, beginning when the regulator “issues a notice of failure” and extending until the individuals file their applications.
New Jersey has yet to bring any comprehensive cryptocurrency legislation into law, but Governor Phil Murphy did sign a bill last year that would create a task force to study potential use cases for blockchain.