The bill shows that New Jersey is following New York’s lead by establishing a comprehensive crypto framework.
A new bill in New Jersey aims to regulate digital assets and virtual currencies as securities. The bill, introduced by Democratic Assemblymember Herb Conaway, Jr., specifies the conditions under which a digital asset would be considered a security under state law.
According to the proposal, all virtual currencies issued and sold to institutional investors should be treated as securities. The bill goes further to define institutional investors as “companies or organizations that invest money on behalf of other people”.
Additionally, the proposal also gives the state’s Bureau of Securities the authority to classify stablecoins as virtual currencies. The bill would amend the New Jersey Uniform Securities Law, which does not address virtual or digital currency or cryptocurrency. Importantly, the bill, if passed, will only affect transactions within the state.
Bill to Regulate Digital Assets as Securities Faces Criticism
Already, the new bill has been criticized by several people who pointed out flaws in its wording and scope. For example, Andrew Hinkes, an Adjunct Professor at New York University, questioned why the bill would favor institutional buyers over retail buyers, who would not be protected by the bill.
Hinkes also raised the issue of preemption, which means that federal law would override the state’s law in cases of interstate transfer.
The bill also attracted the interest of a Bitcoin enthusiast who echoed the sentiments of many Bitcoin HODLers. He reiterated that Bitcoin is not a security and should not be treated as such.
“It is a commodity and will eventually evolve into a currency,” he stated.
New Jersey Pursuing Regulatory Clarity
Despite these drawbacks, the bill shows that New Jersey is following New York’s lead by establishing a comprehensive crypto framework. This is even more important in the continued absence of regulatory clarity from the SEC.
The state also has two other pending bills nearing final approval. One of them is the Digital Asset and Blockchain Technology Act, which would regulate the growing crypto industry in New Jersey. The bill has passed the state assembly unanimously and is now awaiting review from the Department of Treasury.
The other one is the Virtual Currency and Blockchain Regulation Act, which would provide rules for consumer digital assets and decentralized autonomous organizations. The legislature already approved the bill and it is now awaiting action by the governor.
These initiatives demonstrate New Jersey’s commitment to providing regulatory clarity for the digital asset space.
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