A proposed law in New Jersey would make it illegal for firms holding cryptocurrency on the behalf of clients to lend out tokens in its custody.
A bill submitted to the New Jersey General Assembly by Assemblywoman Yvonne Lopez would prohibit firms that hold cryptocurrency on behalf of clients from lending those funds to other entities.
AB3817 would also require such firms to obtain the permission of New Jersey resident-clients before selling, transferring, or assigning any digital assets it holds for those clients.
In addition to its restriction on lending, the bill would prohibit these companies from “hypothecating [and] pledging” cryptocurrency under their custodianship, with or without permission from those tokens’ rightful owners.
The proposed law would also require “any individual, partnership, corporation, association, trust, or other business combination or entity” that is “engaging in digital currency business activity” to register with the state‘s Department of Banking and Insurance, so long as that activity involves “any person that resides, is located, or is conducting business in New Jersey.”
On April 5, the day the bill was submitted, it was referred to the Assembly Science, Innovation and Technology Committee.
Adam Reese is a Los Angeles-based writer interested in technology, domestic and international politics, social issues, infrastructure and the arts. Adam is a full-time staff writer for ETHNews and holds value in Ether, Bitcoin, and Monero.
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Source: ETHNews