Cryptocurrency companies will have to acquire a license to operate in the state of New Jersey if a new proposed bill is passed into law. The bill seeks to promote the legitimacy of the novice industry while also protecting the investors. It will require the companies to disclose key information including its legal name, any prior disciplinary action against it, its anti-money laundering policies and more.
Known as the Digital Asset and Blockchain Technology Act, the bill seeks to not only require crypto companies to acquire a license, but also to create policies that protect the users.
The Department of Banking and Insurance will be charged with issuing the licenses. When applying, crypto businesses must disclose their legal name and any other trade names they use while conducting business. It must also reveal any prior license rejection or revocation in another state, any criminal convictions and its anti-money laundering and anti-terror financing policies.
Cryptos have continued to take root in New Jersey, but there are still no definitive regulations to govern the industry, Yvonne Lopez, the Assemblywoman for Middlesex the bill stated.
Lopez, who’s the prime sponsor behind the bill, believes that the bill will find a fine line between protecting investors and fostering innovation in the industry.
New York has long been the preferred destination for crypto companies. However, the state recently put in place new capital requirements that have proven to be difficult to comply with for small crypto businesses. These businesses have moved to New Jersey, she stated.
She added, “If we want to keep our economy innovative and competitive, we must welcome emerging industries to do business here in New Jersey. It’s also important that we establish fair and reasonable requirements for this new sector that will protect businesses and consumers alike.”
Crypto industry stakeholders in New Jersey have supported the bill. Guillermo Artiles, the cofounder of the Blockchain Association of New Jersey believes that the bill will legitimize the industry and give it a wider appeal. Artiles, whose organization lobbies for crypto and blockchain in ‘the Garden State’, stated:
“Those with businesses connected to these novel technologies are eager to ensure there are protections against questionable activities for the sake of the industry’s legitimacy. As a new industry, image is important.”
The law would certainly enable the state’s market regulators to govern the crypto industry more effectively. So far, the state’s actions have been limited to prosecuting crypto companies that break securities laws.
Last year, the New Jersey Bureau of Securities filed a case against Pocketinns, a crypto startup that it alleged had sold $400,000 worth of unregistered securities. Later in the year, the bureau also issued cease and desist orders against two crypto companies for similar offences.