LEGISLATIVE FISCAL ESTIMATE
[Second Reprint]
ASSEMBLY, No. 1975
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: NOVEMBER 4, 2022
SUMMARY
Synopsis: “Virtual Currency and Blockchain Regulation Act.”
Type of Impact: Annual State cost increase; annual State revenue net impact.
Agencies Affected: Department of Banking and Insurance; Department of the Treasury;
Department of Law and Public Safety; Economic Development
Authority.
Office of Legislative Services Estimate
Fiscal Impact Annual
State Cost Increase Indeterminate
State Revenue Net Impact Indeterminate
 The Office of Legislative Services (OLS) finds that the bill will lead to additional annual State
expenditures due to the increased regulatory and administrative responsibilities imposed on the
Department of Banking and Insurance and the Department of the Treasury. The OLS cannot
quantify the magnitude of these cost increases because the industry is not yet fully established
and the OLS cannot know the extent of the administrative workload that will be placed on the
departments resulting from the provisions of the bill.
 The Economic Development Authority and the Department of Law and Public Safety will also
incur costs under the bill to process additional tax credit applications and to carry out
enforcement actions under the consumer fraud act, respectively.
 The bill will also result in numerous countervailing revenue impacts, the net effect of which
cannot be determined.
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
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BILL DESCRIPTION
This bill establishes a regulatory framework for virtual currency businesses to operate in New
Jersey, creates provisions governing the use of blockchain with certain business entities, and
creates certain incentives for virtual currency businesses to locate in the State.
The bill’s provisions on open blockchain tokens require the developer or seller of a token to
file an electronic notice of intent with the Department of Banking and Insurance and pay a filing
fee of $1,000. Any willful failure by a developer, seller, or facilitator to comply with the duties
imposed by the bill is an unlawful practice under the consumer fraud act and is punishable by a
penalty of not more than $10,000 for a first offense and not more than $20,000 for any subsequent
offense. In addition, violations can result in cease and desist orders issued by the Attorney General,
the assessment of punitive damages, and the awarding of treble damages and costs to the injured
party.
The bill’s provisions allow for the formation of decentralized autonomous organizations under
the State’s limited liability company law. The bill permits these organizations to incorporate as
limited liability companies and, conversely, permits limited liability companies to convert to
decentralized autonomous organizations by amending their articles of organization.
This bill requires the Division of Revenue and Enterprise Services in the Department of the
Treasury to develop a filing system using blockchain through which all required filings may be
submitted. The division may create a blockchain or contract for the use of a privately created
blockchain. The division may consult with all interested parties and partner with technology
innovators and private companies to develop necessary components of the system. The division
will promulgate rules and regulations to effectuate the provisions of the bill.
The bill also provides incentives for virtual currency businesses to locate in New Jersey. The
bill exempts energy and utility services utilized in the creation of a virtual currency, including
mining, from the sales and use tax. The bill also designates that certain virtual currency businesses
are eligible for tax credits for creating jobs in the State. A virtual currency servicer must provide
a plan designed to mitigate or offset any carbon emissions produced from their operations before
receiving either of these tax incentives.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS finds that the bill will lead to additional annual State expenditures due to the increased
regulatory and administrative responsibilities imposed on the Department of Banking and
Insurance and the Department of the Treasury. The OLS cannot quantify the magnitude of these
cost increases because the industry is not yet fully established and the OLS cannot know the extent
of the administrative workload that will be placed on the departments resulting from the provisions
of the bill. The Department of Law and Public Safety may also experience an increased workload
related to violations of the bill’s provisions, and the Economic Development Authority will have
to process additional tax credit applications.
The bill will also result in numerous countervailing revenue impacts, the net effect of which
cannot be determined. The bill exempts energy and utility services utilized in the creation of a
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virtual currency, including mining, from the sales and use tax. This will result in annual State
revenue losses to the General Fund. The tax credits administered by the Economic Development
Authority will further reduce annual State revenues.
While the tax incentives will result in direct State revenue losses, they could also generate
various public benefits. If these public benefits are realized, the State and local governments could
experience indirect fiscal benefits, including increased economic activity leading to additional
income, sales, and business tax revenue. The revenue losses from the tax incentives will also be
countered to a certain extent by required filing fees, monetary penalties that are imposed for
violating the bill’s provisions, and ancillary fees collected by the State.
Section: Commerce, Labor and Industry
Analyst: Juan C. Rodriguez
Revenue and Economic Policy Analyst
Approved: Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).


Statutes affected:
Introduced: 17:15C-2, 17:15C-3, 34:1B-243, 34:1B-246, 54:48-4.2
Technical Review Of Prefiled Bill: 17:15C-2, 17:15C-3, 34:1B-243, 34:1B-246, 54:48-4.2