Hawaii Removes Money Transmitter License Requirement for Crypto Companies
Hawaii has made the decision to eliminate the need for cryptocurrency firms to obtain a money transmitter (MT) license, although these companies are still required to comply with federal regulations.
The exemption for Hawaiian crypto firms from the MT license requirement comes after the completion of the state’s regulatory sandbox initiative, the Digital Currency Innovation Lab (DCIL), which concluded on June 30. The DCIL, a two-year pilot program launched through a partnership between the Hawaii Technology Development Corporation (HTDC) and the Department of Financial Institutions (DFI), allowed digital currency issuers to operate without a state-issued MT license in a controlled environment.
Effective July 1, digital currency activities in Hawaii are no longer regulated under the Money Transmitters Modernization Act or any other statutes governed by the Hawaii Division of Financial Institutions. However, it is important to note that Hawaiian crypto firms must still comply with federal regulations.
The HTDC emphasized that participants of the DCIL and other companies engaging in digital currency activities in Hawaii must adhere to federal licensing and registration requirements set by agencies such as the Financial Crimes Enforcement Network (FinCEN), the Securities and Exchange Commission (SEC), and the Financial Industry Regulatory Authority (FINRA). They must also follow relevant federal regulatory measures regarding consumer protection and anti-money laundering protocols.
The exemption from the MT license requirement is a significant step in reducing regulatory barriers and inconsistencies, allowing Hawaiian crypto firms to innovate and thrive in the state’s digital currency market. However, the DCIL advises consumers to remain vigilant against potential scams and fraud.
The FBI and local police have recently issued warnings about impersonation scams in Hawaii, where scammers pretend to be law enforcement officials in order to steal cryptocurrency. These criminals have been known to call users and falsely claim that they have an outstanding arrest warrant. In addition, con artists have used social media to pose as attorneys from fictitious law firms, promising victims that they can recover lost funds. Between February 2023 and February 2024, victims of crypto scams reported losses of $9.9 million to the FBI’s Internet Crime Complaint Center (IC3).
It is crucial for consumers and crypto companies to exercise caution and stay informed about potential risks and fraudulent activities in the digital currency space.