By
Bhushan Akolkar
July 3rd, 2024
“Crypto companies will be able to continue transaction activity as an unregulated business,” stated the Hawai‘i Department of Commerce and Consumer Affairs (DCCA) in a press release.
Crypto businesses in Hawaii can now operate without needing the state’s Money Transmitter License (MTL) starting June 30, 2024. The strategic move follows the conclusion of the Digital Currency Innovation Lab (DCIL), a collaborative project by the Hawai‘i Department of Commerce and Consumer Affairs (DCCA) since 2020.
The DCIL acted as a regulatory sandbox that allows crypto firms to test and operate under controlled conditions, helping the DCCA to understand industry needs and adjust regulations accordingly. After a thorough evaluation, the DCCA found that crypto activities didn’t fit well under the existing MTL framework.
“The companies will be able to continue transaction activity as an unregulated business,” said the DCCA in a press release. However, this freedom comes with a condition: Hawaii-based crypto firms must still follow federal regulations from FinCEN, SEC, and FINRA. These rules include protections for consumers, Anti-Money Laundering (AML) protocols, and other necessary protections.
Hawaii Eases MTL Rules
Previously, obtaining an MTL in Hawaii, as in most American states, was a complex and resource-intensive process. It involved maintaining specific permissible investments, demonstrating a minimum net worth, crafting a detailed business plan, and implementing a robust compliance program.
As Dilendorf Law Firm points out, MTL requirements vary significantly across states, leading to inconsistencies and hindering business growth. This move by Hawaii could pave the way for a more streamlined approach to crypto regulation nationwide.
Industry leaders like Alchemy Pay, a prominent crypto payment gateway, have actively sought MTL licenses across multiple states. The removal of this requirement in Hawaii may encourage similar firms to establish a presence there, fostering innovation and competition within the state’s crypto ecosystem.
Consumer Protection Remains Paramount
While streamlining operations for crypto businesses, the DCCA is also dedicated to protecting consumers. DCIL Banking Commissioner Iris Ikeda emphasized the importance of raising public awareness about risks associated with cryptocurrencies. The DCCA intends to prioritize educational efforts to inform residents about potential pitfalls.
This announcement coincides with a recent FBI warning about a new crypto scam targeting past victims. The FBI advises the public to be cautious when encountering ads for crypto recovery services, protect their private information, and avoid sending money to suspicious entities, showing the ongoing need for vigilance alongside regulatory changes.
The future of crypto regulation in Hawaii remains to be seen. While this move removes a major obstacle for crypto firms, they still bear the responsibility of complying with federal regulations and protecting consumers.