New Jersey has moved closer to the implementation of a state-level regulatory framework for firms involved in cryptocurrency services. The new Senate bill was introduced on Thursday.

The newly presented Senate bill (3132) proposes to regulate cryptocurrency service providers under the New Jersey Department of Banking and Insurance. 

The recent bill shows that New Jersey is moving one step forward to embracing a similar regulatory structure implemented by neighboring New York, known as BitLicense. The New York State Department of Financial Services (NYSDFS) designed a licensing framework for businesses involved in digital currencies. BitLicense came into effect in 2015, and now several crypto firms are regulated under the framework. The presence of a newly introduced bill by New Jersey in both houses appears to be a strong indication that crypto licensing is being taken seriously at all levels.

When BitLicense was introduced, it was hailed as a defining moment, where the government-less and regulation-less cryptocurrency platforms meet regulatory machinery set up by governments and centralized organizations. A bit over one year down the line, BitLicense is being constantly referred back to, in order to avoid doing the same mistakes.

BitLicense, introduced by Benjamin Lawsky, then Superintendent of the New York State Department of Financial Services led to the implementation of a stringent regulatory framework for the digital currency industry. The license was seen on par with the regulatory practices mainstream financial services are subjected to. However, the requirements stated by BitLicense, in order to overcome the decentralized and pseudonymous nature of Bitcoin far exceeded the AML and KYC practices otherwise followed by traditional banks and financial institutions. These factors proved to be detrimental to the majority of Bitcoin businesses operating in the State of New York.

Bitcoin was and still is relatively new, the sector being in its nascent stage makes most of the companies working on Bitcoin and Blockchain technologies startups. The stringent requirements stated by BitLicense was impossible to adhere to unless the company had venture capital backing. In addition, the BitLicense also threatened the very principle of Bitcoin, which was developed as a decentralized currency for peer to peer transactions where governments or any third party has no business meddling with.