Hawaii, U.S. establishes regulatory sandbox for digital currency companies, issuers can conduct business without license

According to The Block reported on March 19, the Hawaiian government announced this week a regulatory sandbox for digital currency companies.

Hawaii establishes regulatory sandbox for digital currency issuance and advances cryptocurrency business

The State of Hawaii announced a two-year plan to establish a "Digital Currency Innovation Lab" to allow digital currency issuers to conduct business in Hawaii without the need for a state currency issuer license. The governor of Hawaii said in a statement that the government hopes that through the two years, it will have a better understanding of digital currencies and related activities, and focus on the development of relevant legislation.

The statement states:

This two-year plan will help guide legislation and determine the future of Hawaii's digital currency.

Businesses operating in Hawaii can now apply for the Digital Currency Innovation Lab by May 1, 2020. However, according to the statement, selected participants will have to demonstrate their financial information and technical expertise and hold the necessary capital.

The project stems from a partnership between state agencies, namely the Department of Commerce and the Department of Consumer Affairs, the Department of Financial Institutions (DFI) and the Hawaii Technology Development Corporation (HTDC)

Financial Institutions Commissioner Iris Ikeda said the agency also sent a "no action" message. This means that companies that conduct unauthorized fund transfers in Hawaii will not be affected if they are participants in the aforementioned projects. The Financial Institutions Division will not take action on participants in the program.

Ultimately, this two-year plan is intended to guide future policy. Len Higashi, acting executive director of Hawaii Technology Development Corporation, said the insights gained from the project could also open the door to further adoption of cryptocurrencies. According to Higashi, this pilot project has the potential to make Hawaii an early adopter of cryptocurrencies.