New Jersey Cryptocurrency Laws

Relevant Statute

New Jersey Money Transmitters Act C.17:15C

“Money” Definition

“Money” means a medium of exchange authorized or adopted by the United States or a foreign government as a part of its currency and that is customarily used and accepted as a medium of exchange in the country of issuance.

“Money Transmitter” Definition

“Money transmitter” means a person who engages in this State in the business of: (1) the sale or issuance of payment instruments for a fee, commission or other benefit; (2) the receipt of money for transmission or transmitting money within the United States or to locations abroad by any and all means, including but not limited to payment instrument, wire, facsimile, electronic transfer, or otherwise for a fee, commission or other benefit; or (3) the receipt of money for obligors for the purpose of paying obligors’ bills, invoices or accounts for a fee, commission or other benefit paid by the obligor. 17:15C-2

Additional Definitions

“Foreign money transmitter” means a person who engages, in this State, only in the business of the receipt of money for transmission or transmitting money to locations outside of the United States by any and all means, including but not limited to payment instrument, wire, facsimile, electronic transfer, or otherwise for a fee, commission or other benefit. “Payment instrument” means any check, draft, money order, travelers check or other instrument or written order for the transmission or payment of money, sold or issued to one or more persons, whether or not the instrument is negotiable. The term “payment instrument” does not include any credit card voucher, any letter of credit or any instrument which is redeemable by the issuer in goods or services. 17:15C-2

Exemptions

3. a. This act shall not apply to: (1) The United States or any department, agency, or instrumentality thereof; (2) The United States Postal Service; (3) The State or any political subdivision thereof; (4) Banks, bank holding companies, credit unions, building and loan associations, savings and loan associations, savings banks or mutual banks organized under the laws of any state or the United States, provided that they do not issue or sell payment instruments through authorized delegates who are not banks, bank holding companies, credit unions, building and loan associations, savings and loan associations, savings banks or mutual banks; (5) The provision of electronic transfer of government benefits for any federal, state or county agency as defined in Regulation E, 12 C.F.R. s.205.1 et seq., by a contractor for and on behalf of the United States or any department, agency or instrumentality thereof, or any state or political subdivision thereof; and (6) A person licensed to conduct business as a debt adjuster pursuant to P.L.1979, c.16 (C.17:16G-1 et seq.), when acting within the scope of activities regulated by that license. b. Authorized delegates of a licensee, acting within the scope of authority conferred by a written contract as described in section 17 of this act shall not be required to obtain a license pursuant to this act. 17:15C3

Registration Fees

$700 fee for both foreign money transmitter and money transmitter

Bond and Insurance Requirements

8. a. (1) Except as provided pursuant to paragraph (2) of this subsection a., each application shall be accompanied by a surety bond, irrevocable letter of credit or such other similar security device hereinafter “security device”) acceptable to the commissioner in an amount prescribed by the commissioner by regulation of not less than $100,000 and not more than $1,000,000. The security device shall be in a form satisfactory to the commissioner and shall run to the State for the benefit of any person injured by a wrongful act, default, fraud or misrepresentation of the licensee, including its directors, officers, authorized delegates and employees, to secure the faithful performance of the obligations of the licensee with respect to the receipt, handling, transmission, and payment of money in connection with the sale and issuance of payment instruments, transmission of money, or both. In the case of a bond, the bond shall be obtained from a surety company authorized to do business in this State and the aggregate liability of the surety in no event shall exceed the principal sum of the bond. 17:15C-8

Bond Alternatives and Additional Insurance Requirements

(2) Each application to engage only in the business of a foreign money transmitter shall be accompanied by a surety bond, irrevocable letter of credit or such other similar security device (hereinafter “security device”) acceptable to the commissioner in an amount which is based on the annual volume of business in this State as reported in the most recent annual report filed pursuant to section 12 of this act as set forth in the following schedule: Annual Volume of Business Device Amount Up to and including $500,000 $25,000. Over $500,000 and up to and including $1,000,000 $30,000. Over $1,000,000 and up to and including $2,000,000 $35,000. Over $2,000,000 and up to and including $3,000,000 $40,000. Over $3,000,000 and up to and including $4,000,000 $45,000. Over $4,000,000 and up to and including $5,000,000 $50,000. Over $5,000,000 and up to and including $6,000,000 $55,000. Over $6,000,000 and up to and including $7,000,000 $60,000. Over $7,000,000 and up to and including $8,000,000 $65,000. Over $8,000,000 and up to and including $9,000,000 $70,000. Over $9,000,000 and up to and including $10,000,000 $75,000. Over $10,000,000 and up to and including $11,000,000 $80,000. Over $11,000,000 and up to and including $12,000,000 $80,000. Over $12,000,000 and up to and including $13,000,000 $90,000. Over $13,000,000 and up to and including $14,000,000 $95,000. Over $14,000,000 and up to and including $15,000,000 $100,000. 17:16C-8

Capital Requirements

5. a. (1) Except as provided pursuant to paragraph (2) of this subsection a., for a person licensed to engage in business in this State only as a foreign money transmitter, each licensee shall at all times have a net worth of not less than $100,000, calculated in accordance with generally accepted accounting principles. Licensees engaging in money transmission at more than one location or through authorized delegates shall have an additional net worth of $25,000 per location or agent located in this State, as applicable, up to a maximum net worth amount of $1,000,000. (2) Each person licensed to engage in business in this State only as a foreign money transmitter shall at all times have a net worth of not less than $50,000, calculated in accordance with generally accepted accounting principles. Licensees engaging in foreign money transmission at more than one location or through authorized delegates shall have an additional net worth of $10,000 per location or agent located in this State, as applicable, up to a maximum net worth amount of $400,000. (3) A person licensed to engage in the business of a foreign money transmitter pursuant to R.S.17:15-1 et seq. on the day prior to the effective date of this act, whose license is continued pursuant to subsection b. of section 27 of this act, shall fully comply with the net worth requirements of paragraph (2) of this subsection a. as follows: (a) by the first business day following 90 days after the effective date of this act, have a net worth of $5,000; (b) by July 1, 1999, have a net worth of $5,000 plus 25% of the additional net worth amount required pursuant to paragraph (2) of this subsection a.; (c) by July 1, 2000, have a net worth of $5,000 plus 50% of the additional net worth amount required pursuant to paragraph (2) of this subsection a.; and (d) by July 1, 2001, have a net worth in full compliance with the amount required pursuant to paragraph (2) of this subsection a. 17:15C-5

Money Transmission License Required for Crypto Exchange?

No

State Comments or Statements

Virtual currency does not fit under the statutory definition of money or payment instrument. Released regulatory framework for digital currency businesses to operate in New Jersey (which is pending): https://www.njleg.state.nj.us/2018/Bills/A2000/1906_I1.HTM New Jersey guidance states that it would conform to federal tax treatment of virtual currency, meaning virtual currency would be treated as intangible property and subject to sales tax.