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Hawaiian House Democrats Ask State Regulator to Reconsider Tough Rules for Crypto Firms

House Democrats of the Hawaii legislature are asking the state marketplace regulator to stop the restrictive laws that were put in place against crypto businesses in 2016.

Policymakers have asked the Department of Commerce and Consumer Affairs to reassess the asset reserve that is required of crypto companies. The bill is sponsored by 10 Democrats and is now pending before the state’s House Consumer Protection & Commerce Committee.

At the moment, it is required of exchanges to hold an amount of fiat currencies equivalent to the value of the cryptos they hold.

“The 2016 … law governing money transmitter businesses … subjected these companies to licensing and asset reserve requirements that were too burdensome for them to do business in Hawaii,” according to the bill.

This is actually true, as many exchanges, including Coinbase, have decided to leave the state as soon as the law was passed.

The bill also mentions: “The Division of Financial Institutions’ asset reserve requirements for digital currency companies are not consistent with other states. Cryptocurrency is an evolving technology globally with much still to be explored and assessed.”

The regulatory regime in place today asks companies to have a money transmitter license in the case that they are offering financial instruments for the sale of transactions with those in Hawaii – even in cases in which the business is not physically present there!

Fortunately, it seems steps are being taken, as the state’s financial regulator has opened a sandbox in late 2020 in order to test how exchanges could operate in Hawaii. As a result, several exchanges have started to operate in the 50th US state in a limited capacity.

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