FameEX Hot Topics | Hawaii Ends Sandbox Program: Crypto Firms No Longer Require State Money Transmitter Licenses

The U.S. state of Hawaii's regulatory sandbox, the Digital Currency Innovation Lab (DCIL), concludes today. Consequently, crypto companies will no longer need a Hawaii-issued money transmitter license to conduct business within the state, although they must still comply with federal regulations.

The Department of Commerce and Consumer Affairs of Hawaii and the Hawaii Technology Development Corporation (HTDC) issued a reminder on Friday about the DCIL's conclusion on June 30. The DCIL is a two-year pilot program established in 2020 through a partnership between HTDC and the Hawaii Division of Financial Institutions (DFI). It allowed participating digital currency issuers to operate in Hawaii without needing a state money transmitter license. 

“This collaborative research project was designed to explore digital currency activities in the state and assess the regulatory framework necessary for companies specializing in digital currency,” the announcement stated. The findings from the project indicate that digital currency companies will no longer require a Hawaii-issued money transmitter license to conduct business within the state.

However, Hawaiian regulators emphasized that these companies must comply with all applicable federal licensing or registration requirements. This includes those set by the Financial Crimes Enforcement Network (FinCEN), Securities and Exchange Commission (SEC), and the Financial Industry Regulatory Authority (FINRA), as well as relevant federal consumer protection and anti-money laundering regulations.

Prior to the establishment of the Digital Currency Innovation Lab, crypto firms in Hawaii needed a money transmitter license to operate. Earlier this year, the Hawaii Department of Commerce and Consumer Affairs announced that, following the sandbox program’s completion, it was determined that digital currency companies would no longer need a Hawaii-issued money transmitter license to conduct business in the state. This change allows companies to continue transaction activities as unregulated businesses, provided they adhere to federal regulations.

The DCIL has provided valuable insights into the operation and regulation of digital currencies in Hawaii, ultimately leading to this significant regulatory change. As the program concludes, crypto companies will benefit from reduced regulatory hurdles at the state level, potentially fostering greater innovation and adoption within the digital currency space in Hawaii.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.