S4672

An Act establishing the New Jersey Bullion Depository and supplementing Title 52 of the Revised Statutes.

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

1. This act shall be known and may be cited as the “New Jersey Bullion Depository Act.”

2. As used in this act:

“Administrator” means the bullion depository administrator appointed under section 4 of this act.

“Bullion” means precious metals that are formed into uniform shapes and quantities such as ingots, bars, or plates, with uniform content and purity, as are suitable for or customarily used in the purchase, sale, storage, transfer, and delivery of bulk or wholesale transactions in precious metals.

“Business day” means a day other than a Saturday, Sunday, or banking holiday for a bank chartered under the laws of this State.

“Class 3 Vault” means a vault facility that meets or exceeds the security standards established by Underwriters Laboratories Standard UL 608 for Class 3 vaults, or equivalent standards established by a nationally recognized testing laboratory, providing protection against sophisticated attacks for a minimum sustained attack period of 60 minutes.

“Deposit” means the establishment of an executory obligation of the depository to deliver to the order of the person establishing with the depository the obligation, on demand, a quantity of a specified precious metal, in bullion, specie, or a combination of bullion and specie, equal to the quantity of the same precious metal delivered by or on behalf of the depositor into the custody of the depository or a depository agent.

“Depositor” means a person who makes a deposit.

“Depository” means the New Jersey Bullion Depository.

“Depository account” means the rights, interests, and entitlements established in favor of a depositor with respect to a deposit in accordance with this act and rules adopted under this act.

“Depository account holder” means the original depositor or a successor or assignee of the depositor respecting the depository account.

“Depository agent” means a person licensed in accordance with this act to serve as an intermediary between the depository and a retail customer in making a transaction in precious metals bullion or specie.

“Precious metal” means a metal, including gold and silver that bears a high value-to-weight ratio relative to common industrial metals and customarily is formed into bullion or specie.

“Specie” means a precious metal stamped into coins of uniform shape, size, design, content, and purity, suitable for or customarily used as currency, as a medium of exchange, or as the medium for purchase, sale, storage, transfer, or delivery of precious metals in retail or wholesale transactions.

3. a. There is established the New Jersey Bullion Depository as a division within the Department of the Treasury.

b. The depository is established to serve as the custodian, guardian, and administrator of certain bullion and specie that may be transferred to or otherwise acquired by this State or an agency, a political subdivision, or another instrumentality of this State, and to provide secure storage services for precious metals to private parties.

c. The depository shall be constructed and operated by a private entity or entities under contract with the department.

4. a. The depository shall be administered as a division of the Department of the Treasury and under the direction and supervision of a bullion depository administrator appointed by the State Treasurer.

b. The administrator shall:

(1) administer, supervise, and direct the operations and affairs of the depository and depository agents;

(2) liaise with the State Treasurer and other divisions of the Department of the Treasury to ensure that each transaction with the depository involving State money, involving an agency, a political subdivision, or another instrumentality of this State, or involving a private person is planned, administered, and executed in a manner to achieve the purposes of this act; and

(3) ensure compliance with all applicable federal and State laws and regulations.

c. The administrator may appoint, subject to the approval of the State Treasurer, a deputy administrator or other subordinate officer as necessary and appropriate to the efficient administration of the depository.

5. The private operator contracted to operate the depository shall:

a. provide full insurance coverage for all stored assets;

b. meet all security and operational standards established by the State Treasurer;

c. maintain appropriate licenses and certifications; and

d. provide regular audits and reporting as required by the administrator.

6. a. The depository shall deliver any precious metal held by or on behalf of the depository in bullion, specie, or a combination of bullion and specie, on the order of a depository account holder in a quantity of that precious metal as is available in the depository account holder’s depository account.

b. The depository shall make a delivery on demand by the presentment of a suitable check, draft, or digital electronic instruction to the depository or a depository agent.

c. The depository shall make a delivery not later than five business days after the date of presentment.

7. The depository shall not:

a. enter into precious metals leasing, derivatives trading, or any leveraging activities that would allow account balances to exceed actual physical holdings;

b. credit depository account balances if to do so would cause the aggregate depository account balances to exceed the aggregate quantities of precious metals held by or for the benefit of the depository;

c. extend credit to a person except as incidental to the performance of functions provided by this act; or

d. engage in banking or savings and loan functions.

8. The following persons may invest money in a depository account by purchasing precious metals and depositing the precious metals with the depository:

a. fiduciary, including an administrator, executor, custodian, guardian, or trustee;

b. a political subdivision of this State or an instrumentality of this State;

c. a business or nonprofit corporation;

d. a charitable or educational corporation or association; or

e. a financial institution, including a bank, savings and loan association, or credit union.

9. a. The State Treasurer by rule may establish fees, service charges, and penalties to be charged a depository account holder for services regarding a depository account.

b. Revenue that the depository realizes from fees, charges, or other payments received in the course of depository operations shall be deposited to the credit of the State General Fund.

10. a. The depository shall use private, independently managed firms and institutions licensed as depository agents as intermediaries to conduct retail transactions in bullion and specie on behalf of the depository.

b. The State Treasurer shall establish licensing requirements for depository agents, including requirements for electronic information sharing systems to ensure real-time transaction reporting.

11. The State Treasurer shall submit to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature a written report on the status, condition, operations, and prospects for the depository each year not later than December 31.

12. a. All depository facilities shall meet or exceed Class 3 vault security standards as established by Underwriters Laboratories or equivalent rating agency.

b. The depository facility shall maintain the following minimum security requirements:

(1) 24-hour armed security personnel and comprehensive surveillance systems with real-time monitoring;

(2) multi-factor authentication systems including biometric access controls;

(3) dual-person authorization protocols for all vault access;

(4) reinforced construction meeting or exceeding federal banking standards;

(5) advanced fire suppression and environmental protection systems;

(6) emergency backup power and communications systems; and

(7) perimeter security and intrusion detection systems.

c. The administrator shall require annual security audits by independent certified security firms with appropriate clearances and expertise in precious metals storage facilities.

d. Any security protocol and security audit shall not be a public record and shall be exempt from disclosure under provisions of P.L.1963, c.73 (C.47:1A-1 et seq.), commonly known as the open public records act.

13. a. The depository shall maintain comprehensive emergency access procedures for natural disasters, civil emergencies, and other force majeure events.

b. Business continuity plans shall ensure depositor access to accounts and holdings within 72 hours of any emergency affecting normal operations.

c. In the event of private operator bankruptcy, insolvency, or material breach of contract, the State Treasurer shall have authority to:

(1) assume immediate control of all depository operations;

(2) appoint a successor operator on an emergency basis;

(3) implement customer protection measures; and

(4) ensure continuity of services pending permanent resolution.

d. Customer assets shall be held in bankruptcy-remote structures to protect against operator creditor claims.

e. The State Treasurer shall maintain standby agreements with qualified third-party operators to ensure continuity of operations if needed.

14. a. The private operator shall maintain comprehensive insurance coverage including:

(1) all-risk property coverage for the full value of all stored assets;

(2) fidelity coverage for employee dishonesty and theft;

(3) general liability and professional liability coverage;

(4) cyber liability coverage for electronic systems and data; and

(5) business interruption coverage.

b. Minimum aggregate insurance coverage shall be $100 million, with higher amounts required based on asset values held.

c. Insurance policies shall name the State of New Jersey as an additional insured party and provide that coverage cannot be cancelled without 60 days’ advance notice to the administrator.

d. The depository shall establish and maintain reserve funds to cover potential losses not covered by insurance.

e. Customer assets shall be held separate and apart from all other assets and shall not be subject to attachment or garnishment for debts of the private operator.

15. This act shall take effect on the first day of the seventh month next following the date of enactment, except that the State Treasurer may take any anticipatory administrative action in advance as shall be necessary for the implementation of this act.

STATEMENT

This bill establishes the New Jersey Bullion Depository as a division within the Department of the Treasury to provide secure storage for precious metals including gold and silver.

The depository would be constructed and operated entirely by private contractors under State oversight. The State Treasurer would appoint an administrator to oversee operations and ensure compliance with security standards

The bill establishes comprehensive account management allowing eligible entities to deposit, withdraw, and transfer precious metals within five business days. Eligible account holders include fiduciaries, political subdivisions, business and nonprofit corporations, educational institutions, and financial institutions.

Key operational protections include prohibition of fractional reserve practices to ensure 100 percent physical backing of all accounts, mandatory Class 3 vault security standards with specific requirements for armed security personnel, biometric access controls, and comprehensive surveillance systems. The legislation requires annual security audits by independent certified firms with results kept confidential under the Open Public Records Act.

The bill mandates comprehensive insurance coverage with a minimum of $100 million in aggregate coverage, including all-risk property coverage for stored assets and fidelity coverage for employee dishonesty. Customer assets must be held in bankruptcy-remote structures separate from operator assets and protected from creditor claims.

Emergency procedures ensure depositor access within 72 hours of any operational disruption. In cases of operator bankruptcy or material breach, the administrator has authority to assume immediate control, appoint successor operators, and implement customer protection measures. The State shall maintain standby agreements with qualified operators to ensure continuity.

The depository shall use licensed private agents as intermediaries for retail transactions, with the State Treasurer establishing licensing requirements and real-time transaction reporting systems. Revenue from depository fees would be deposited to the State General Fund.

The bill includes a delayed effective date allowing the State Treasurer to take advance administrative action for implementation, including adoption of regulations and operator selection procedures.

This legislation creates economic opportunities for New Jersey while providing residents and businesses with secure, accessible precious metals storage without relying on facilities concentrated in New York.