Bill > S1304

Introduced Session

This bill, the "Digital Asset and Blockchain Technology Act," regulates digital asset business activity. The bill defines "digital asset" to mean a representation of economic, proprietary, or access rights that is stored in a machine-readable format and has a transaction history that is recorded in a distributed, digital ledger or digital data structure in which consensus is achieved through a mechanism consistent with the underlying protocol. Examples of digital assets include, but are not limited to, digital consumer assets, digital securities, and virtual currency. "Digital asset" does not include securities, whether in digital form or otherwise, as defined pursuant to law. The bill provides that a person is not to engage in a digital asset business activity, or hold themselves out as being able to engage in a digital asset business activity, unless the person is licensed in this State by the New Jersey Bureau of Securities (bureau), or has filed a pending license with the bureau. The bill provides the bureau may license a person to carry on one or more digital asset business activities described in the bill. The bureau shall have the authority to exempt persons from the provisions of the bill concerning engaging in digital asset business activity without a license and to determine whether a person is subject to a license pursuant to the bill. The bill provides that a person who violates the provisions requiring licensure is liable for a penalty of $500 per day, from the first day the bureau issues a notice of failure to apply for a license until a license application is filed with the bureau. The bill provides that an application for a license is to be submitted in a form and manner set forth by the bureau. Each application is to be accompanied by a nonrefundable fee. Applicants are to provide certain information relevant to the applicant's proposed digital asset business activity. Certain information provided to the bureau pursuant to an application for a license is to be protected from public disclosure. The bill requires applicants to provide a list of any litigation, arbitration, or administrative proceedings to which the applicant, or certain other individuals, has been a party to for 10 years prior to submission of the application. This bill also permits the bureau to use the Nationwide Multistate Licensing System, or a similar system, to conduct criminal history records checks or applicants and certain other individuals. The bill requires the bureau to grant or deny any digital asset business license application within 180 days of receipt of a completed application. The bureau may refuse an application for a digital asset business license application if a licensee or applicant fails to meet certain standards specified in the bill. Licensees are required to submit a renewal of a license that contains an update of all information required at initial licensing as well as certain other information described in the bill. The bill provides that the bureau may audit any digital asset business licensee. The bill stipulates that each licensee is to maintain and enforce confidential, written compliance policies which are to be reviewed and approved by the licensee's board of directors or an equivalent governing body. The bureau may suspend or revoke a digital asset business license upon certain findings that are provided in the bill. The bill provides the bureau chief with the authority to, for good cause shown, summarily suspend, revoke, or deny any license pending final determination of a proceeding. Under the bill, notice of any suspension or revocation of a license issued by the bureau is to prominently indicate that a right to a hearing is available. A licensee, under the bill, is to provide the bureau with any document relating to the operations of the licensee upon receiving written notice from the bureau. The licensee is to maintain records of all client transactions and any accounts, correspondences, memoranda, and other records as the bureau may require, for no less than six years from the date of a transaction's occurrence, unless the bureau by rule prescribes another timeframe. The bureau has the authority to conduct examinations to determine a licensee's compliance with the provisions of the bill. The bill requires the terms and conditions of a digital asset business involving a customer's account to be disclosed at the time the customer contracts for a digital asset business service. The disclosure is to be full and complete, contain no material misrepresentations, be in readily understandable language and may include, as appropriate and to the extent applicable, certain information concerning fees and charges, risks to the customer, and any protections or securities that are in place. The disclosures required by the bill are to be displayed and individually agreed to by a customer before any digital asset transaction at an electronic kiosk. Any fee to be charged is required to be displayed and individually agreed to by a customer before any digital asset transaction or digital asset balance inquiry at an electronic kiosk. Under the bill, it is a violation for any person to make or cause to be made, in any document filed with the bureau or in any proceeding, investigation or examination conducted under the bill, any statement which is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect. In addition, the bill provides the bureau chief with certain investigatory authority to determine whether any person has violated or is about to violate any provision of the bill or to otherwise aid in the enforcement of the bill. The bill makes it unlawful for any officer or employee of the bureau to use for personal benefit any information which is filed with or obtained by the bureau that is not made public. Lastly, the bill establishes the "Digital Asset Enforcement Fund" in the Division of Consumer Affairs (division) of the Department of Law and Public Safety is to continue as a dedicated, nonlapsing, revolving fund. All fees, penalties, costs, fines, and other collected moneys are to be deposited in the fund and used by the director of the division to administer and enforce the provisions of the bill, and to conduct investigations related to the bill.

Committee Categories

Nellie Pou (D)*,  Andrew Zwicker (D)*,  Paul Moriarty (D), 

Introduced in the Senate, Referred to Senate Commerce Committee (on 01/09/2024)

Official Document