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Hawaiian House Democrats are requesting the Department of Commerce and Consumer Affairs, to consider easing stern rules against crypto businesses. A report unveiled this news on March 17, noting that 10 democrats sponsored a bill that seeks to amend the harsh laws against crypto firms that have been in place for almost five years. Reportedly, this bill has been forwarded to the state’s House Consumer Protection and Commerce Committee, pending further deliberations.
According to the report, the current legislation directs that crypto exchanges must hold fiat currencies that are equal to the cryptocurrencies that their clients hold.
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Pointing out some of these harsh rules against crypto firms, the bill mentioned,
In 2016, the Department of Commerce and Consumer Affairs’ Division of Financial Institutions issued requirements for applicants that trade, transmit, or store digital currency in the State, including subjecting digital currency companies to licensing, asset reserve, and financial statement requirements, and indicated that digital currency value is not a permissible investment under the Money Transmitters Act.
Harsh rules have seen Hawaii lag, regarding crypto adoption
The Division of Financial Institutions applied the state law that governs transmitter businesses on digital currency companies. In turn, the agency subjected crypto businesses to burdensome licensing and asset reserve requirements that made it impossible for them to operate in Hawaii. For instance, San Francisco-based Coinbase exchange stopped serving its customers in the country following these regulatory changes.
The policymakers went on to argue that the Division of Financial Institutions’ asset reserve policies for digital currency companies are quite different from other states. On top of this, the licensing requirements apply to all crypto businesses that provide financial instruments for sale or transaction purposes with Hawaii citizens. This requirement allegedly applies even to firms that do not have a physical presence in the state.
To this end, the lawmakers called for a policy change, saying that cryptocurrency is an evolving technology across the globe and that it still has a lot of facets to explore and evaluate.
Reportedly, this is not the first attempt that Hawaii has made to become a crypto-friendly hub. The state’s financial watchdog opened a sandbox to assess how crypto exchanges might work in the past year. Since then, the country has attracted 12 crypto firms, including ErisX and bitFlyer, to operate in the state, albeit at a limited capacity.