Hawaii Launches Digital Currency Sandbox To Attract Crypto Firms

Hawaii Launches Digital Currency Sandbox To Attract Crypto Firms

Crypto news Lifestyle Social
March 26, 2020 by Super System
350
Blockchain and Blockchain

2-Year Cryptocurrency Experiment Begins

Hawaii Crypto News

Hawaii has revealed a new “Digital Currency Innovation Lab” on March 17, 2020, a cryptocurrency and blockchain incubator, the governor’s office reported. This as a collaborative project between the Hawaii Technology Development Corporation (HTDC), the Department of Commerce and Consumer Affairs, and the Division of Financial Institution (DFI).

During this pilot program’s initial 2 year period, issuers of digital currency will be allowed to do business in the state without needing to obtain a state money transmitter license. Through the use of this program, Hawaii hopes to achieve more knowledge and an in-depth perspective of digital currency in order to lay some groundwork regulations for it across the state afterward.

Temporary Immunity Against Action For Unlicensed Money Transmission

Hawaii’s commissioner of financial institutions, Iris Ikeda, emphasized that as per a no-action message issued by the DFI, there will be no regulatory recourse for companies operating under the sandbox as they engage in what would usually be deemed as unlicensed money transmissions. 

He stated that the move is a leverage of the DFI statutory authority that will allow a new innovative way of introducing digital currency issuers to Hawaii, and using the knowledge that comes from this exercise to develop further legislation to help Hawaii adopt digital currency further in the future. 

The hope is that by doing this, Hawaii will put itself at the forefront of the new financial technology, and reap the rewards and economic benefits of this leadership stance. Companies who are interested in applying for this program must do so by May 1, with a $500 application fee and a $1,000 foo for each participation term. 

First Effort To Foster Cryptocurrencies Since 2017

In 2017 there was a double-reserve requirement introduced in Hawaii which mandated that companies who operated with virtual currencies must hold an equal sum of fiat and the crypto holdings of their clients. While it did not prevent crypto companies from operating in the state, it drove companies operating in Hawaii out. One of these companies was Coinbase, the US-based crypto exchange.

Crypto Future In Hawaii Is Unclear

What happens after the two year sandbox period is unclear at this time. The HTDC website states that all participating companies must conclude all digital currency transactions after the two-year cycle unless approval is explicitly granted, at which point the DFI will determine the appropriate licensing for the company to continue operations. 

Last week, Rhode Island introduced a similar regulatory sandbox initiative in order to facilitate innovation within cryptocurrency and blockchain.

 

 

 


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