Hawaii Set to Introduce Regulatory Sandbox for Cryptocurrency Companies
by Osato Avan-Nomayo on March 19, 2020
Financial regulators in Hawaii have introduced a regulatory sandbox for cryptocurrency businesses in the State as a way of developing clear-cut laws for the emerging digital economy.
Two-Year Sandbox for Cryptocurrency Firms in Hawaii
Hawaii’s governor’s office released a press statement on Tuesday (March 17, 2020) announcing the creation of the regulatory sandbox for cryptocurrency firms. The new regulatory sandbox is the direct result of the collaboration between the Division of Financial Institutions (DFI) — the State’s financial regulators, and technology stakeholders.
Commenting on the decision, Iris Ikeda, Hawaii’s Commissioner of Financial Institutions, remarked:
“DFI is leveraging its statutory authority to provide an innovative way to introduce digital currency issuers into the State of Hawaii, while ensuring the safety of our consumers. By acknowledging digital currencies as a transmission vehicle of the future, we will be able to craft legislation that is conducive to its development in Hawaii.”
According to Ikeda, participating cryptocurrency businesses in the regulatory sandbox will be able to operate without having to comply with some of the State’s more stringent financial laws. For example, Ikeda revealed that crypto firms that would otherwise have to register as money transmitters will be free from such compliance requirements once they are admitted into the sandbox program.
As part of the sandbox, Hawaiian regulators will examine participating cryptocurrency businesses to determine their level of capital, technical, and financial expertise to operate in the State. Stakeholders in the program will also determine whether these crypto businesses pose any risks to consumers in Hawaii.
As part of the press statement from the governor’s office, interested applicants to the regulatory sandbox pilot have until May 1, 2020, to send in their applications.
Following the regulatory sandbox pilot, crypto stakeholders will be hoping that Hawaii is gearing up for the creation of more clear-cut regulations for the emerging digital landscape in the State.
Creating a Conducive Atmosphere for Hawaii’s Crypto Ecosystem
The news of the regulatory sandbox pilot is another indication of Hawaii’s growing move towards becoming a more conducive environment for cryptocurrency commerce. As previously reported by BTCManager, State lawmakers introduced a bill in January 2020 that would allow banks to offer crypto custody services.
One of the major highlights of the regulatory sandbox is the removal of the double-reserve requirement that mandated crypto businesses to hold the fiat equivalent of all customer cryptocurrency holdings. This particular compliance requirement had seen companies like Coinbase shutting down their operations in the State.