Trenton – In an effort to better regulate digital assets, the Senate Budget and Appropriations Committee today approved legislation sponsored by Senator Nellie Pou which would establish the “Digital Asset and Blockchain Technology Act.”
“Under current law, New Jersey has no authority to regulate the rapidly growing cryptocurrency industry,” said Senator Pou (D-Passaic/Bergen). “Virtual currency is currency that is not controlled by a centralized banking authority, and it is imperative that we establish the appropriate measures to effectively regulate this industry as more companies begin to shift towards offering cryptocurrency for purchase. With this bill, we will be able to manage who can purchase and sell digital assets and protect our residents from purchasing falsified assets as well.”
The bill, S-3132, would regulate digital asset business activity under the Department of Banking and Insurance (DOBI). The bill would define “digital asset” as a representation of economic, proprietary, or access rights that is stored electronically and is distributed digitally through a ledger or data structure. This would include digital consumer assets and virtual currency.
Under the bill, DOBI could issue a license to a person to participate in one or more of the following digital asset business activities:
- receiving a digital asset for transmission or transmitting a digital asset;
- storing, holding, or maintaining custody of a digital asset on behalf of others;
- buying and selling digital assets as a customer business;
- performing exchange services of digital assets as a customer business;
- issuing a digital asset; or
- borrowing or lending of customer digital assets.
Furthermore, individuals would be prohibited from engaging in a digital asset business activity unless they are licensed, or have a pending license, issued by DOBI. Applications for licensure to participate in digital asset business must be submitted through the Nationwide Multistate Licensing system. Participating in a digital asset activity without a license would result in a penalty of $500 per day, from the first day DOBI issues a notice of failure to apply for a license until a license application is filed.
The bill was released from the committee by a vote of 12-0.