A new bill by proposed by two New Jersey assemblymen could mean tax and regulatory breaks for digital currency companies operating in the state.
According to The Star-Ledger, the bill would lessen burdens for cryptocurrency companies in an attempt to incentivize job creation in the state. Proposed by Assemblyman Rai Mukherji (D-Hudson) and Assemblyman Gordon Johnson (D-Bergen), the 30-page bill would create a regulatory framework for digital currency companies to operate within as well.
The bill comes two months after New Jersey’s Assembly Financial Institutions and Insurance committee held a two hour hearing about Bitcoin. The New Jersey Treasury officially recognized the digital currency in April when it wrote that digital currency transactions were subject to sales tax and would be treated as barter.
The Star-Ledger reported that the new bill, titled the “Digital Currency Jobs Creation Act,” would qualify companies for up to $5,000 in tax write-offs for each new job they create and exempt Bitcoin companies from having to pay tax on electricity. The legislation would also require companies to have an “effective cyber-security program” and hire a chief security officer.
“You need a lot of firepower by way of technology to be in this business,” Mukherji said. “It would try to ease some of that burden.”
He added that he is unsure whether the bill, which was yet to be introduced to the state Senate, would advance, but said some regulation would be needed.
“The legislation clarifies where digital currency stands sort of in the rubric of New Jersey law. In other states that’s been confusing,” Mukherji told The Star-Ledger. “I think this would be the first statute of its kind in the country. We would be establishing the framework legislatively.”
Taxes, Violations and Job Growth
The bill, which hopes to encourage digital currency job growth in the state, aims to both set up a regulatory framework for startups to work within as well as provide incentives in the form of tax cuts.
If passed, digital currency companies directly or indirectly involved with the creation of Bitcoin would not need to pay sales tax on all purchases of energy and utilities, not just electricity. The bill also included a passage which would safeguard startups from unnecessary intrusion from state authorities. It stated it would stop state municipalities “from prohibiting, abridging, levying a tax upon or otherwise restricting the creation, retention, transmission or any other use of the digital currency within the state, except as otherwise provided for in the bill”.
The Digital Currency Job Creation Act would also allow individuals and companies to pay their taxes with Bitcoin but did not mention if the same would be true for other digital currencies.
Lastly, the bill would require employees, founders and stakeholders who handle any digital currency assets of a company to be fingerprinted by The New Jersey Commissioner of Banking and Insurance. It would also give the Commissioner of Banking and Insurance the ability to fine bitcoin startups up to $5,000 for violations of the act.
Updated at 3/24/2015 1:00 PM EEST to add additional information about the bill after it has been made public.