In a move that could have far-reaching implications for the cryptocurrency market, New Jersey recently introduced a new bill to change how cryptocurrencies are treated in the state.
The bill seeks to classify all crypto issued and sold to institutional investors as securities.
Security Classification Under New US Crypto Law
The proposed legislation provides a comprehensive framework for the classification of crypto, introducing key definitions to guide its implementation.
Under the proposed legislation, virtual currencies issued and sold directly to institutional investors would be classified as securities.
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This classification subjects them to the State’s “Uniform Securities Law (1967).” Furthermore, any regulations put into effect by the Bureau of Securities within the Division of Consumer Affairs.
The bill empowers the Bureau to adopt rules and regulations through the Administrative Procedure Act to effectively implement the provisions of this act.
However, the bill defines a “digital asset” as a representation of economic, proprietary, or access rights stored in a machine-readable format with a transaction history recorded in a distributed, digital ledger.
The Present State of US Crypto Law
The definition explicitly includes virtual currencies.
It introduces the term “institutional investor,” to include such entities as banks. Additionally, hedge funds, endowments, private equity firms, pension funds, and mutual funds.
Amid ongoing scrutiny of the US government’s handling of crypto regulations, Ethereum’s co-founder Joseph Lubin expressed optimism about the government’s capability to establish suitable crypto regulations.
“I anticipate that, with previous technologies like the internet, the web, and cryptography, clear heads will prevail. America will see that decentralized protocols, blockchain, cryptocurrency are aligned with the philosophies of the US.”
Meanwhile, Web3 legal strategist Jose Bencomo likened the current regulatory climate in the US to “traversing a field of landmines.”
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