According to reports, a New Jersey proposed law will make it an illegal activity for firms holding cryptocurrency on clients behalf to lend tokens in its custody out. This move by the New Jersey legislation will see cryptocurrency exchange activities between firms and other entities become a crime under state law.
According to the bill submitted to the General Assembly of New Jersey by Assemblymember Yvonne Lopez. The new law will prohibit cryptocurrency exchange firms that hold virtual coins on behalf of customers from lending out such funds in their custody to other entities.
AB3817 will also require cryptocurrency holding firms to obtain permission from their New Jersey resident-customers before selling, assigning or transferring, any digital assets in their possession belonging to those clients. In addition to the restriction on lending provided in the proposed bill, if passed into law the new law will also ban virtual currency holding companies from pledging and hypocathering crypto under their custodianship, whether it is with the explicit permission or without a request from the rightful owners of those tokens.
What more does this soon to be law propose? The proposed legislation, submitted by Assemblywoman Yvonne Lopez will also require the following:
“Any partnership, individual, corporation, trust, association, or other business entity or combination” that is currently “engaging in the digital currency business” to ensure that they register with the New Jersey’s Department of Banking and Insurance, as long as the activity involves “any individual that resides, or is located, or currently conducting their business in New Jersey.”
As at April 5, reports circulated across media houses in New Jersey that the bill was submitted and referred to the committee of Science, Innovation and Technology Committee of the State Assembly. More information on the progress of this bill will be revealed in due time.