New Jersey has a long history of fostering and investing into innovation; crypto is simply the next step in that process.
With other states making decisive moves to attract investment and human capital, New Jersey policymakers should keep these factors in mind before dismissing crypto and tokenization as second-tier priorities.
As the weather began to warm up this spring, and continues to bring the heat this summer, crypto policy discussions and the focus paid to them have followed suit. Following years of inaction at the congressional level, several bills and measures were passed (with bipartisan support, for a nice change) seeking to make the operating environment easier for crypto organizations. While one measure was vetoed by the White House, optimism remains that some bipartisan legislation will emerge in the short to medium term.
Simultaneously, both candidates vying for the White House this November have made decisive and strong pivots to the crypto community after appearing indifferent (in the case of former President Donald Trump) or overseeing a regulatory environment that could be generously described as difficult (President Joe Biden). Trump was the first candidate of a major political party to accept campaign contributions in cryptocurrencies, and the Biden White House has made several overtures to the crypto business community seeking to mend ties. These efforts, of course, might be partially influenced by several polls released in the spring that indicated crypto investors and swing voters had significant overlap.
This is not to mention the billions of dollars that have poured into crypto exchange-traded funds, or the fact that virtually every major bank in the U.S. has deployed a blockchain and/or crypto payment product. Last but not least, there are multiple states wooing crypto capital and investment, with Wyoming well on its way to issuing and managing a state-backed crypto token. In other words, crypto has come to the mainstage, states and organizations are taking notice and New Jersey should do so as well.
Let’s take a look at three things policymakers should keep in mind when crypto comes across their desk or inbox.
Crypto is big business
Since the launch of bitcoin spot ETF products, these instruments have taken in tens of billions of investment, rapidly moving bitcoin to the second-largest asset in the ETF world. On top of these direct investments, and highlighted by the Forbes 50 Blockchain annual listing, virtually every household name in the U.S. is investing, deploying or at least experimenting with bitcoin. Lastly, even banks whose CEOs (Jamie Dimon at J.P. Morgan) actively disparage bitcoin have launched blockchains and cryptocurrencies of their own.
Takeaway: Crypto brings financial and human capital, and in a big way, to the table.
Crypto brings innovation
With all of the focus around bitcoin prices, nonfungible tokens or the latest meltdown on a single project, it is easy to lose track of the innovation delivered via tokenization. Blockchain and tokenization of information is just that: a differentiated way in which data is managed, transferred, analyzed and, ultimately, used by end recipients. Every business leader knows that data is the lifeblood of decision-making, and the firms that have best access to the most accurate data will outpace those who lag behind.
Takeaway: Prices dominate headlines, but the real story is how firms can maximize data for business decision making.
Crypto uses renewable energy
Renewable energy is a hot-button topic, including in New Jersey, but the fact remains that the policy direction toward more renewable energy has been set and is underway. One major critique and pushback against crypto — including in New York — centers around the idea that crypto is a drain on the grid as well as having a negative carbon effect. Naysayers might be interested in a report from the Bitcoin Mining Council, representing miners in the U.S., documenting that nearly two-thirds of energy used to mine (create) new bitcoin already come from non-fossil fuel sources.
Takeaway: New Jersey is already investing into renewable energy, and crypto is a proven partner/user of these resources.
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The legacy of innovation and forward thinking in New Jersey is well known, and crypto can be the next successfully built, fostered and thriving industry in the Garden State.
Sean Stein Smith is an associate professor at Lehman College (CUNY) and is a member of the New Jersey Association of CPAs board of trustees.
