In 2018, New Jersey Governor Phil Murphy released an economic development plan branded the “State of Innovation.” The program set out a strategy where the state would stimulate the growth of “cutting-edge” industries to boost growth—jobs and the economy—a cross-section of innovation and opportunity in sectors like crypto.
Five years later, the initiative is labelled a success, at least when looking at the impact of online casinos in New Jersey from a growth perspective. The state has successfully changed how residents gamble by regulating and making online gambling accessible. In doing so, they provided a regulatory framework on which states nationwide have based their regulations. The result speaks for themselves. According to a study from 2020, 6600 new jobs were created and an economic output of $259 million in tax revenue—figures that have increased since and expect to have a CAGR of 10-12% leading up to 2028.
Other states that followed in the footsteps of New Jersey have shown similar results after legalizing online gambling. The crypto market is another industry that shares similarities with online gambling. It’s digital, borderless, possesses economics at scale and has attracted criminal organizations’ attention. Even today, online and offline gambling is a hotbed for money laundering and tax evasion. Cryptocurrency poses the same threats to lawmakers and institutions and provides similar opportunities.
In the spirit of innovation and opportunity, New Jersey recently launched a new bill called the “Virtual Currency and Blockchain Regulation Act” (Senate Bill No. 4163 – NJ S4163), intending to establish a regulatory framework for crypto and blockchain companies. With online gambling, they’ve demonstrated their ability to handle complex industries. The bill is well-timed with the new regulations set out by the European Union to create a unified framework for EU member states. In the absence of federal guidance, US states like New Jersey can take inspiration from the MiCA regulations set out by the EU.
The biggest hurdle for crypto regulations is the fight for priority over other sectors and topics. We’re in the middle of a tough bear market with no end in sight. This means that the allocation of both time and resources needed to formulate and implement new regulations won’t be prioritized. Furthermore, SEC chair Gary Gensler recently said that they will focus their attention on regulating AI rather than crypto in the near term due to the sudden impact and immediate danger of AI technology and market risk.
What’s positive is that the “Virtual Currency and Blockchain Regulation Act” from NJ shows initiative, and as with everything in politics and bureaucracy, it takes time. Regardless of what the SEC spends their time on, local governments can take their individual paths to growth and stability. Being a first mover in our sector can be a wise decision. The absence of federal laws incentivizes states like New Jersey to regulate crypto. The first state to provide a transparent and forceful legal framework for crypto will attract national and international companies. It’s a long-term strategy that can be as fruitful as New Jersey’s move to legalize online gambling, creating thousands of jobs and hundreds of millions of tax dollars. After all, bear markets are for building.
Source: https://coincodex.com/article/31835/secs-focus-on-ai-incentives-local-states-to-regulate-crypto/