NJ Blockchain Legislation Would Require Licensing for Digital Asset Services Businesses

November 12, 2020

The state of New Jersey is moving closer to passing a law that would regulate cryptocurrency services. A new Senate bill introduced last week, known as the "Digital Asset and Blockchain Technology Act," would require licensing of all businesses involved in digital asset services.

The bill mirrors one introduced to the state's General Assembly in February.  The legislation would regulate cryptocurrency service providers under the New Jersey Department of Banking and Insurance. Unlicensed businesses operating in the state would be subject to a $500 per day penalty until filing an application for a license.

The new bill states, “The bill provides that a person may not engage in a digital asset business activity, or hold itself out as being able to engage in a digital asset business activity, with or on behalf of a resident unless the person is licensed in this State by the Department of Banking and Insurance, or has filed a pending license with the department, or licensed in another state to conduct digital asset business activity by a state with which this state has a reciprocity agreement.”

New York has required licensing for businesses involved with digital currencies since passing its BitLicense regulations in 2015. The legislation has changed the cryptocurrency landscape in the state, with 25 entities licensed through the New York State Department of Financial Services (NYSDFS). After the law took effect, 15 companies ceased operations in the state.

The first BitLicense was granted to Circle, a bitcoin wallet company, in 2015. It would take nearly a year before a second license was issued to distributed ledger company Ripple. Other licensed companies in the state include Coinbase, bitFlyer, Square, Genesis Global Trading, XAPO Holdings, bitPay and Coinsource, a bitcoin ATM. Facebook also applied for a license in 2019, but has not been granted one yet.

Other states regulating cryptocurrency companies include Nevada, which last year passed legislation requiring crypto businesses and proprietors to possess a relevant transmission license before operating a digital currency ATM kiosk.

To find out more about how cryptocurrency and blockchain businesses are being regulated globally, TMC is hosting The Blockchain Event on June 22-25, 2021, at the Miami Beach Convention Center. The event will feature panel discussions, keynotes and case studies about the role of blockchain in a variety of industries and vertical markets.

Edited by Maurice Nagle



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