Hawaiian Democrats have called on the Department of Commerce and Consumer Protection to lift restrictions imposed on cryptocurrency firms several years ago. Legislators have asked the regulator to review the requirements for virtual asset service providers (VASP).
According to current regulations, companies that trade digital assets, as well as transfer or store them, are required to have a reserve stock of fiat money. Their number should be equivalent to the value of the digital assets that their clients hold.
Democrats who introduced the new bill noted that the requirements have become too onerous for cryptocurrency firms doing business in Hawaii. This led to the fact that many trading platforms were forced to change jurisdiction. Among them was the Coinbase exchange.
“The reserve requirements that apply to cryptocurrency firms in Hawaii are inconsistent with those of other states. Cryptocurrencies are a technology that is evolving all over the world. Much remains to be studied and evaluated, ”the Democrats said.
In addition, the current regulatory regime requires digital asset firms to obtain a license to transfer funds. A license is required even if such firms are not physically located in Hawaii, but provide their financial instruments to residents of this state or provide services to them.
Democrats believe that if cryptocurrency firms comply with financial reporting requirements, digital assets should not be viewed as just “permissible,” but risky investments. Hawaii’s financial regulator has already begun to take action to change the current legal regime.
Last year, the Department of Commerce, the Financial Institutions Division, and the Hawaiian Technology Development Corporation created the Digital Currency Innovation Lab’s regulatory sandbox. As part of this initiative, cryptocurrency firms can operate in Hawaii without a government license to provide financial services.
