A New Jersey lawmaker wants to license crypto exchanges and custodians looking to conduct business in the Garden State.
Assemblywoman Yvonne Lopez (D.-19) introduced the Digital Asset and Blockchain Technology Act Friday, 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 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. Companies conducting business will also be required to make certain disclosures to customers.
The bill is framed as focusing on consumer protection, according to a press release.
“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 in a statement.
She pointed to New York state’s capital expenditure requirements, saying many small crypto businesses fled to New Jersey as a result.
In her statement, Lopez said it was important to “establish fair and reasonable requirements” for these businesses.
Still, welcoming emerging industries will “keep our economy innovative and competitive,” she 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.