Hawaii Launches "Regulatory Sandbox"

US exchanges ErisX and bitFlyer are among 12 cryptocurrency firms selected for the pilot program of the Hawaiian digital currency sandbox to regulate cryptocurrency. The regulatory sandbox will allow virtual asset service providers to conduct business in the state without obtaining a money transfer license for two years.

The pilot program offered by the Digital Currency Innovation Lab marks the return of crypto firms to the state and is the first regulatory sandbox of its kind. Recall that in 2017, a “double reserve requirement” was introduced, according to which companies were required to have reserves in fiat currencies corresponding to the amount of cryptocurrency held by their clients.

In March, the state took a step towards the crypto industry to potentially loosen tight rules for virtual asset service providers by launching a Digital Currency Innovation Lab. The goal is to meet tough regulatory requirements and create economic opportunity for the islands through the early adoption of the digital currency. Following the launch of the Lab, Hawaii invited crypto firms to apply to participate in the pilot program.

As such, the regulatory sandbox initiative marks the return of crypto exchanges to the islands so that exchanges like bitFlyer are promoted to full licensees in the future. The full list of contributors today includes BlockFi, CEX.io, Apex Crypto, Cloud Nalu, Coinme, Flexa, Gemini, Novi, River Financial, and Robinhood Crypto.

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