New Jersey lawmaker Yvonne Lopez is concerned. There is a lack of consumer protection in the crypto space and she wants to put that right by introducing new regulatory measures.
A Bill Regulating Crypto in New Jersey
New Jersey Assemblywoman Lopez is the prime sponsor of new legislation labeled the “Digital Asset and Blockchain Technology Act” (A-2891). In a release this Wednesday, Lopez explained that the bill has two main purposes.
Primarily, it aims to protect consumers who “are not quite sure what [crypto] is.” At the same time, it proposes to establish “licensure requirements” for virtual currency businesses operating in the State.
Lopez maintains that she wants the crypto industry to grow in New Jersey. However, this can only happen in the right regulatory environment. She stated:
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.
The innovation economy keeps New Jersey competitive, however we must also ensure consumers remain protected. This Digital Asset and Blockchain Technology Act accomplishes both of these goals and creates an infrastructure for the virtual currency industry to thrive in NJ! https://t.co/SiEEAuMz8q
— Yvonne Marie Lopez (@AswLopez) February 18, 2020
New Jersey has recently become home to many small digital asset businesses forced out of neighboring New York. The recent capital expenditure requirements required to operate in the State are too difficult for many companies to meet.
While Lopez welcomes emerging industries, she believes their activity must not go unchecked. There are currently no state regulations for the growing industry in New Jersey. Lopez commented:
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.
The Digital Asset and Blockchain Technology Act
Under the new bill, for crypto-related businesses to operate in New Jersey they must acquire a license from the Department of Banking and Insurance. Failing that, they must be licensed in another state with which New Jersey has a “reciprocity agreement.”
Cryptocurrency businesses must disclose their full legal names as well as any fictitious name that the individual applicant may use for conducting business. They must also provide a list of any prior attempts to gain a license elsewhere. This includes any revocations, suspensions or rejections.
The bill also requires digital asset businesses to disclose any criminal convictions or pending proceedings against the applicant. They must also demonstrate that they have full AML and CFT policies in place.
Lopez’s proposed legislation appears to aim at weeding out criminal activity rather than crippling companies’ growth with unreasonable demands. Co-founder of the Blockchain Association of New Jersey Guillermo Artiles expressed his support of the bill, saying:
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… Everyone agrees that the industry has an exciting future — one right here in New Jersey.
New Jersey’s Answer to BitLicense?
If companies are starting to draw parallels between New Jersey’s bill and New York’s onerous BitLicense, it seems they can breathe a sigh of release. The requirements of Lopez’s bill appear to be a lot less intrusive and better-intended.
Crypto businesses operating here will have to disclose the terms and conditions of a consumer’s account. However, this is only at the time when the consumer contracts the service.
The disclosure must include all charges and fees involved and state whether the account is protected by the Federal Deposit Insurance Cooperation. It should also include extensive information for consumers about the risks associated with investing in digital assets. Lopez said:
With this legislation, consumers will be better-informed of the risks involved when investing in virtual currency.
Do you think the proposed New Jersey crypto regulations are a good idea? Add your thoughts below!
Images via NJTV, Twitter @AswLopez