Pending Cryptocurrency Regulations in New Jersey
Written by: Mary McCarthy
New Jersey is poised to pass a licensure bill that would clarify cryptocurrency regulations and licensure procedures in the state. Referred to as the “Digital Asset and Blockchain Technology Act,” the proposal was introduced in February 2020. As of May 2021, it has been referred to the New Jersey Senate Budget and Appropriations Committee to review several amendments to the bill. A different licensing framework, known as “BitLicense,” has already been passed in New York. Here’s what the new legislation would mean for New Jersey residents:
If passed, the pending legislation stipulates that New Jersey residents would be required to have an active or pending license through the Department of Banking and Insurance before completing digital asset transactions. The bill defines “digital asset” as “a representation of economic, proprietary, or access rights that are stored in a machine-readable format, and has a transaction history that is recorded in a distributed, digital ledger or digital data structure in which consensus is achieved through a mathematically verifiable process.”
A key amendment to the bill provides that applicants file for an initial license that can be renewed. Additionally, out-of-state individuals may apply for the same licensure through the Nationwide Multistate Licensing System. Individuals licensed in another state will be able to conduct digital asset transactions, provided that the state they’re licensed in has a reciprocity agreement with New Jersey. The bill would also enact a hefty penalty for violating the licensure procedure. Failure to apply for a license will result in a fine of $500 per day for violating individuals.
Ultimately the goal of the bill is to set clear licensure procedures while further defining the evolving digital asset class. Virtual currency and digital asset regulations are evolving at the federal and state levels, so it’s essential to stay updated on the latest cryptocurrency legislation.
New Jersey A2891. TrackBill. (n.d.). https://trackbill.com/bill/new-jersey-assembly-bill-2891-digital-asset-and-blockchain-technology-act/1901750/.
Pang, L., & Flynn, G. E. (2020, December 22). New Jersey Senate considers crypto license bill: Insights: DLA Piper Global Law Firm. DLA Piper. https://www.dlapiper.com/en/us/insights/publications/2020/12/new-jersey-senate-considers-crypto-license-bill/. State Regulations on Virtual Currency and Blockchain Technologies (Updated March 2021). JD Supra. (n.d.). https://www.jdsupra.com/legalnews/state-regulations-on-virtual-currency-2160466/.