New Jersey lawmakers propose tax breaks for digital currency companies

The State Senate of New Jersey in action in the senate chamber, June 2013. Trenton, New Jersey.

Two New Jersey lawmakers have proposed a bill that would create regulatory framework for companies that deal in digital currency and offer tax breaks to such companies, reported NJ.com.

“I want to encourage innovation here in New Jersey. I think there’s an opportunity for job creation,” said Assemblyman Raj Mukherji, who introduced the legislation with Assemblyman Gordon Johnson.

The bill would bar municipalities from instituting their own rules or taxes on digital currency, said NJ.com. Companies that operate in the digital currency industry would have to register with the state Department of Banking of Insurance, a process that would include a business plan, a registration fee to be set by the commissioner, and fingerprints and photographs of “key members” of the business.

The companies would have to develop and maintain “an effective cyber security program” and designate a staff member as chief information security officer to oversee the program. The businesses would also be required to keep records of their activity for at least five years.

NJ.com reported that the bill includes incentives designed to attract digital currency companies to New Jersey. Firms that create at least 10 jobs would receive favorable treatment under the state’s tax credit program, qualifying for up to $5,000 for each position they create in addition to the base tax credit for which they qualify. Such companies, which often use energy-consuming computer equipment, would be exempt from paying taxes on money spent on electricity.

Assemblyman Raj Mukherji

“You need a lot of firepower by way of technology to be in this business,” said Mukherji. “It would try to ease some of that burden.”

He told NJ.com that he was not sure if his legislation, which has not yet been introduced in the state Senate, would advance, but he stated that some kind of regulation would be required.

“The legislation clarifies where digital currency stands sort of in the rubric of New Jersey law. In other states that’s been confusing,” said Mukherji. “I think this would be the first statute of its kind in the country. We would be establishing the framework legislatively.”

Image credits:

NJ State Senate – Rickyrab

Raj Mukherji – Public domain image