Committee Statement to Senate, No. 1756 — Digital Asset and Blockchain Technology Act, New Jersey (2022)

Summary

This is the Senate Commerce Committee Statement to Senate, No. 1756, with committee amendments, State of New Jersey, dated March 14, 2022. The committee reports favorably Senate Bill No. 1756, the "Digital Asset and Blockchain Technology Act," which regulates digital asset business activity. The bill provides that a person may not engage in digital asset business activity with or on behalf of a resident unless licensed by the Department of Banking and Insurance, or having filed a pending license with the department. A person who violates the licensure provisions is liable for a penalty of $500 per day, and the department is to grant or deny a license application within 120 days of receipt. Licensees are to maintain a record on all client transactions for not less than six years.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

     SENATE COMMERCE COMMITTEE

                    STATEMENT TO

                  SENATE, No. 1756
                   with committee amendments



 STATE OF NEW JERSEY
                     DATED: MARCH 14, 2022

    The Senate Commerce Committee reports favorably Senate Bill
No. 1756, with committee amendments.
    As amended, 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, has a transaction history that is recorded in a distributed,
digital ledger or digital data structure in which consensus is
achieved through a mathematically verifiable process. Examples of
digital assets include digital consumer assets, digital securities, and
virtual currency. “Digital asset” does not include securities, whether
in digital form or otherwise, as defined pursuant to subsection m. of
section 2 of P.L.1967, c.93 (C.49:3-49), or as defined pursuant to
paragraph (1) of subsection (a) in the federal “Securities Act of
1933,” 15 U.S.C. s.77b(a)(1), or paragraph (10) of subsection (a) of
the federal “Securities Exchange Act of 1934,” 15 U.S.C.
s.78c(a)(10).
    The bill provides that a person may not engage in a digital asset
business activity, or hold itself out as being able to engage in a
digital asset business activity, with or on behalf of a resident unless
the person is licensed in this State by the Department of Banking
and Insurance (department), or has filed a pending license with the
department.
    The bill provides the department may license a person to carry
on one or more digital asset business activities described in 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 department issues a notice of failure to apply for a
license until a license application is filed with the department.
    The bill provides that an application for a license is to be
submitted through the Nationwide Multistate Licensing System, and
made in the form and medium to be prescribed by the department
by regulation. 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, submitting the
                                 2

information through the Nationwide Multistate Licensing System.
The bill provides that no license may be issued by the department to
an individual who has, within the five years preceding the
submission of an application for a license, been convicted of
embezzlement, forgery, fraud, or theft.
    The bill requires the department to grant or deny any digital asset
business license application or license reciprocity application within
120 days of its receipt. The department may refuse an application
for a digital asset business license or license reciprocity application
if a licensee or applicant fails to meet certain standards specified in
the bill.
    Licensees are required to submit a renewal report, through the
Nationwide Multistate Licensing System, that contains an update of
all information required at initial licensing and a description of
certain information described in the bill.
    The bill provides that the department 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 department may
suspend or revoke a digital asset business license upon certain
findings that are provided in the bill.
    Under the bill, any denial, suspension, or revocation of a license,
or warning notice issued by the department, is to prominently
indicate that a right of appeal is available. A licensee or prospective
licensee that is aggrieved by a decision of the department may
appeal the decision by filing a request for a hearing before the
Office of Administrative Law. The department may issue written
requests for information to a licensee regarding the operations of
the licensee. A record on all client transactions is to be maintained
by the licensee for not less than six years.
    The bill requires the terms and conditions of a digital asset
business involving a consumer’s account to be disclosed at the time
the consumer 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 consumer, 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 consumer 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 consumer before any
digital asset transaction or digital asset balance inquiry at an
electronic kiosk.
                                3

COMMITTEE AMENDMENTS
   The committee amended the bill to:
   (1) add language introducing section 2 of the bill on definitions;
   (2) replace references to “executive officer” with “key
individual;” and
   (3) remove a provision on additional resources for the
department to perform its work.


File and source

File

2022-03-14_SCM_S1756_S1.pdf

Size

121,768 bytes

SHA-256

c4b9f2bb35b24ebd1a098673a5fc377aab83395165e473de5df30a3a1941da58

Our copy

2022-03-14_SCM_S1756_S1.pdf

Original

No public link identified.