It’s been a newsworthy year for cryptocurrencies and the blockchain technologies that enable them, as federal and state officials move to regulate the volatile multi-billion dollar cryptocurrency market.
Last November, the total market value of all cryptocurrencies soared to more than $3 trillion. However, at the beginning of this year, its value tumbled below the $1 trillion mark and has since failed to make up for its losses, causing worry among investors politicians, and regulators, alike.
In New Jersey, the General Assembly recently passed a package that would establish regulations for digital assets, cryptocurrencies, and blockchain technologies; prohibit elected officials from accepting virtual currencies and non-fungible tokens as gifts, and require the state to develop a program promoting blockchain integration.
The “Digitial Assets and Blockchain Regulation” Act, would allow decentralized autonomous organizations to form in the state, permit companies to issue electronic stock certificates, and would create tax incentives for virtual currency businesses to move to New Jersey.
It would also require developers to file online with the Department of Banking and Insurance before making an open blockchain token available for sale, and pay a $1,000 filing fee.
Sen. Robert Singer (R-Ocean), who sponsored the Senate version of the blockchain regulations bill, said he soon plans to introduce amendments that ensure the measure is business-friendly, taking a shot at recently approved legislation in New York, which he called “very restrictive.”
“We want to be more industry-friendly,” Singer said. “I don’t want to be restrictive. I want to be open-minded, but I also want to do protection of the consumer.”
New York Gov. Kathy Hochul has yet to sign the legislation passed in June that would impose a first-in-the-nation two-year moratorium on proof-of-work crypto mining. This type of mining is considered hazardous to the environment because it requires large amounts of fossil fuel energy.
New Jersey’s bill does not currently include these types of restrictions. Singer said he’s working with Democrats who sponsored the proposals in the General Assembly and with the business community on amendments. Though, he didn’t reveal details, saying the changes could come in a matter of days.
Assemblyman Raj Mukherji (D-Hudson) and Assemblywoman Yvonne Lopez (D-Middlesex), co-sponsors on the General Assembly bill, could not be reached for comment.
The cryptocurrency market, which is still a relatively novel concept for many Americans, has faced much uncertainty in 2022, as the prices of coins like Bitcoin and Ethereum continue to fluctuate.
In March, Lopez said she introduced the proposal to provide transparency, consumer protections, and a licensing structure for both operators and consumers. At the time, Lopez said some of her constituents were victims of cryptocurrency fraud.
Singer said the volatility of cryptocurrency is indicative of the economy itself and he thinks its value will bounce back.
“Like any new idea, there are certainly some pitfalls to it,” Singer said. “But I think in general, there is a whole group of people out there that want to know that they can invest their money without Uncle Sam always looking over their shoulder.”
According to the nonpartisan Office of Legislative Services (OLS), the proposal would increase yearly state expenses, “due to the increased regulatory and administrative responsibilities imposed on the Department of Banking and Insurance and the Department of the Treasury.”
But, noted that the amount of increase is yet to be determined because: “the industry is not yet fully established and OLS cannot know the extent of the administrative workload that will be placed on the departments resulting from the provisions of the bill.”
The OLS also stated that the legislation would increase workloads for the Department of Law and Public Safety and the state Economic Development Authority, which would be required to enforce penalties for people who violate the new statutes and process tax incentive applications, respectively.