Lopez Introduces Bill to Create Consumer-Friendly Protections and Regulations in Virtual Currency Industry

On February 18, 2020, one Bitcoin was worth 9,719 traditional dollars. However, there’s no guarantee that value will be the same next week, next month, or in the next few seconds.

The cryptocurrency industry, which came into the mainstream with the advent of Bitcoin in 2009, continues to expand in New Jersey, but there are currently no State regulations for the growing industry.

“Throughout New Jersey, there are ATMs that dispense Bitcoins. People see and hear about it in their day to day lives, but most are not quite sure what it is,” said Assemblywoman Yvonne Lopez (D-Middlesex), who recently introduced legislation to regulate the virtual currency industry in New Jersey. “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 is the prime sponsor of new legislation called the “Digital Asset and Blockchain Technology Act” (A-2891), which would establish licensure requirements for virtual currency businesses in the State and create consumer-friendly protections.

Under the bill, digital asset businesses must be licensed by Department of Banking and Insurance in order to operate in New Jersey, or be licensed in another state in which New Jersey has a reciprocity agreement. In the application process, a cryptocurrency business would be required to disclose its legal name and any fictitious or trade name the applicant uses to conduct business. It also must provide a list of any license revocation, suspension, rejection or other disciplinary action taken against the applicant in another state; a list of criminal convictions, deferred prosecution agreements, and pending criminal proceedings against the applicant; and anti-money laundering and anti-terror financing policies, among other information.

New York State recently promulgated capital expenditure requirements for the virtual currency sector that proved difficult for small digital asset businesses to meet. As a result, many have chosen to find a home in New Jersey.

“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,” said Lopez.

“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,” said Guillermo Artiles, cofounder of the Blockchain Association of New Jersey, which advocates for virtual currency businesses in the state. “Everyone agrees that the industry has an exciting future — one right here in New Jersey.”

Additionally, the bill requires cryptocurrency businesses to disclose the terms and conditions of a consumer’s account at the time the consumer contracts for a service. A disclosure shall provide a schedule of fees and charges, whether the consumer’s account is protected by the Federal Deposit Insurance Cooperation, and information detailing that an investment in digital assists is volatile and subject to market losses, among other requirements.

“With this legislation, consumers will be better-informed of the risks involved when investing in virtual currency,” said Lopez.