May 29, 2024
New Jersey Proposes Virtual Currency as Securities for Institutional Investors
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New Jersey Assembly Contemplates Digital Asset Classification in Securities Bill

The New Jersey General Assembly might examine a proposal that determines the classification of digital assets or virtual currencies as securities within state regulations. As per the bill introduced by Democratic Assemblyman Herb Conaway, Jr., on Nov. 29, any virtual currencies sold to institutional investors would fall under the securities category in New Jersey. This proposed legislation is an addition to the existing New Jersey Uniform Securities Law, which presently lacks provisions for virtual, digital, or cryptocurrency.

The bill’s scope is limited to institutional investors, defined as entities investing money on behalf of others. It explicitly mentions the potential categorization of stablecoins as virtual currencies under the supervision of the state’s Bureau of Securities. It’s important to note that this legislation would solely affect transactions governed by New Jersey law and would not impact the jurisdiction of the federal Securities and Exchange Commission.

Parallel to this proposal, New Jersey has two other pending bills regarding cryptocurrency. The ‘Virtual Currency and Blockchain Regulation Act’ focuses on regulating consumer digital assets and decentralized autonomous organizations (DAOs). It has recently cleared both chambers of the New Jersey legislature and is awaiting approval by the governor.

Moreover, the ‘Digital Asset and Blockchain Technology Act’ proposes that the state Department of Treasury review and sanction a digital payment platform catering to state-approved businesses operating primarily in cash-based environments without access to traditional financial services. This platform would utilize a virtual currency pegged to the USD and streamline audits, compliance, and local tax payments.

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