Sponsored by:
Senator ROBERT W. SINGER
District 30 (Monmouth and Ocean)
Senator VIN GOPAL
District 11 (Monmouth)
SYNOPSIS
"Virtual Currency and Blockchain Regulation Act."
CURRENT VERSION OF TEXT
As introduced.
An Act concerning virtual currency and blockchain, and amending and supplementing various parts of the statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) This act shall be known and may be cited as the "Virtual Currency and Blockchain Regulation Act."
2. (New section) As used in P.L. , c. (C. ) (pending before the Legislature as this bill):
Affiliate means any person that directly or indirectly controls, is controlled by, or is under common control with, another person.
"Blockchain" means a digital ledger or database which is chronological, consensus-based, decentralized and mathematically verified in nature.
Commissioner means the Commissioner of Banking and Insurance.
"Consumptive" means a circumstance when a token is exchangeable for, or provided for the receipt of, services, software, content or real or tangible personal property, including rights of access to services, content or real or tangible personal property.
"Department" means the Department of Banking and Insurance.
"Developer" means the person primarily responsible for creating an open blockchain token or otherwise designing the token, including by executing the technological processes necessary to create the token.
"Digital asset" means a representation of economic, proprietary or access rights that is stored in a computer readable format, and includes digital consumer assets, digital securities and virtual currency. As used in P.L. , c. (C. ) (pending before the Legislature as this bill), the terms digital consumer asset, digital security, and virtual currency shall be mutually exclusive.
"Digital consumer asset" means a digital asset that is used or bought primarily for consumptive, personal or household purposes and includes:
(1) An open blockchain token constituting intangible personal property as otherwise provided by law; and
(2) Any other digital asset which is not virtual currency or a digital security.
"Digital security" means a digital asset which constitutes a security, as defined in P.L.1967, c.93 (C.49:3-49), but shall exclude digital consumer assets and virtual currency.
"Facilitator" means
a person who, as a business, makes open blockchain tokens pursuant to
subsection a. of section 2 of P.L. ,
c. (C. ) (pending before the Legislature as this bill) available for resale to the public after a token has been purchased by an initial buyer.
"Financial investment" means a contract, transaction or arrangement where a person invests money in a common enterprise and is led to expect profits solely from the efforts of a promoter or a third party.
Open blockchain token" means a digital unit that is:
(1) created:
(a) in response to the verification or collection of a specified number of transactions relating to a digital ledger or database;
(b) by deploying computer code to a digital ledger or database, which may include a blockchain, that allows for the creation of digital tokens or other units; or
(c) using a combination of the methods specified in paragraphs (a) and (b) of this paragraph.
(2) recorded to a digital ledger or database, which may include a blockchain; and
(3) capable of being traded or transferred between persons without an intermediary or custodian of value.
"Open blockchain token" shall not include virtual currency or digital security as those terms are defined in this section.
Person means any individual, partnership, corporation, association, trust, or other business combination or entity, however organized.
"Seller" means a person who makes an open blockchain token available for purchase to an initial buyer.
"Virtual currency" means a digital asset that is:
(1) used as a medium of exchange, unit of account or store of value; and
(2) not recognized as legal tender by the United States government.
3. (New section) a. An open blockchain token shall be intangible personal property if it meets the following characteristics:
(1) the predominant purpose of the token is consumptive;
(2) the developer or seller did not market the token to the initial buyer as a financial investment; and
(3) at least one of the following is satisfied:
(a) the developer or seller reasonably believed that it sold the token to the initial buyer for a consumptive purpose;
(b) the token has a consumptive purpose that is available at or near the time of sale and can be used at or near the time of sale for a consumptive purpose;
(c) the initial buyer of the token is prohibited by the developer or seller of the token from reselling the token until the token is available to be used for a consumptive purpose; or
(d) the developer or seller takes other reasonable precautions to prevent an initial buyer from purchasing the token as a financial investment.
b. Before making an open blockchain token available for sale, the developer or seller of a token, or the registered agent of the developer or seller, shall electronically file a notice of intent with the Department of the Banking and Insurance and pay a filing fee of $1,000. The notice of intent shall contain the name of the person acting as a developer or seller, the contact information of the person, or the registered agent of the person and comprehensive details, to be determined by the Commissioner of Banking and Insurance, on the open blockchain token made available for sale. A form shall be made available by the department for this purpose, which shall include a secure electronic form conspicuously posted on the departments Internet website. A developer, seller and the registered agent of these persons, if applicable, shall have a continuing duty to update the contact information provided on a notice of intent as long as the open blockchain token associated with the notice is actively being sold.
c. A facilitator shall:
(1) before making any token available for resale to the public, confirm with the department that a notice of intent has been filed pursuant to subsection b. of this section;
(2) at all times, have a reasonable and good faith belief that a token subject to resale conforms to the requirements of subsection a. of this section; and
(3) take reasonably prompt action to terminate the resale of a token that does n