SENATE, No. 3694

STATE OF NEW JERSEY

221st LEGISLATURE

INTRODUCED SEPTEMBER 30, 2024

Sponsored by:

Senator PAUL D. MORIARTY

District 4 (Atlantic, Camden and Gloucester)

SYNOPSIS

Prohibits cryptocurrency automatic teller machines.

CURRENT VERSION OF TEXT

As introduced.

An Act concerning digital currency and supplementing P.L.1960, c.39 (C.56:8-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. The Legislature finds and declares that:

a. There has been a significant rise in scams associated with the use of Bitcoin automatic teller machines. According to the United States Federal Trade Commission's Consumer Sentinel Network, fraud losses linked to these cryptocurrency automatic teller machines have surged nearly tenfold since 2020 to more than $110 million in 2023 and exceeded $65 million in just the first half of 2024. Since many incidents of fraud go unreported, these figures likely represent only a portion of the overall impact.

b. Recently, cryptocurrency has become a major payment method for various scams, expanding beyond fake investment schemes, and the increased availability of Bitcoin automatic teller machines has facilitated this trend.

c. Bitcoin automatic teller machines are linked to scams involving the impersonation of government agencies, financial institutions, businesses, or tech support companies.

d. The median loss reported by Bitcoin automatic teller machines was $10,000 in the first half of 2024, and individuals aged 60 and older were three times more likely to report such losses.

e. Therefore, it is the Legislature's intent to help protect consumers from falling victim to the losses associated with the use of cryptocurrency automatic teller machines.

2. a. For the purposes of this section:

"Business entity" means any natural or legal person, business corporation, professional services corporation, limited liability company, partnership, limited partnership, business trust, association, or any other legal commercial entity organized under the laws of this State or any other state or foreign jurisdiction.

"Cryptocurrency" means any digital form of currency that functions as a medium of exchange through a decentralized computer network without reliance on any central authority such as the government or a financial institution.

"Cryptocurrency automatic teller machine" means a physical, internet-connected kiosk that allows a user to buy, sell, send, or receive cryptocurrency by depositing money using a debit card, credit card, or cash.

b. It shall be an unlawful practice and a violation of P.L.1960, c.39 (C.56:8-1 et seq.) for any business entity to own, control, install, manage, sell, or offer for sale a cryptocurrency automatic teller machine in this State.

c. In accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), the Director of the Division of Consumer Affairs may promulgate rules and regulations to effectuate the provisions of this section.

3. This act shall take effect on the first day of the six month next following the date of enactment.

STATEMENT

This bill prohibits any business entity from owning, controlling, installing, or managing a cryptocurrency automatic teller machine (ATM) in this State.

Under the bill, cryptocurrency is defined as any digital form of currency that functions as a medium of exchange through a decentralized computer network without reliance on any central authority such as a government or financial institution. In addition, a cryptocurrency ATM means a physical, internet-connected kiosk allowing users to buy, sell, send, or receive cryptocurrency by depositing money using a debit card, credit card, or cash.

Under the provisions of the bill, owning, controlling, installing, managing, selling, or offering for sale a cryptocurrency ATM in this State is an unlawful practice under the consumer fraud act, punishable by a monetary penalty of not more than $10,000 for a first offense and not more than $20,000 for any subsequent offense. In addition, violations may result in cease and desist orders issued by the Attorney General, the assessment of punitive damages, and the awarding of treble damages and costs to the injured party.

While cryptocurrency ATMs offer a convenient way for individuals to buy, sell, send, or receive digital currencies, there has been a significant rise in scams associated with their use. According to the United States Federal Trade Commission's Consumer Sentinel Network, fraud losses linked to these cryptocurrency automatic teller machines have surged nearly tenfold since 2020 to more than $110 million in 2023 and exceeded $65 million in just the first half of 2024. Since many incidents of fraud go unreported, these figures likely represent only a portion of the overall impact. It is the sponsor's intent to protect consumers from falling victim to financial losses associated with the use of cryptocurrency automatic teller machines.

New Jersey S 3694

Cryptocurrency Automatic Teller Machines

2024 NE S 3694

New Jersey S 3694

Cryptocurrency Automatic Teller Machines

2024 NE S 3694