Hawaii frees crypto companies from state licensing requirement

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The Hawaii Department of Commerce and Consumer Affairs (DCCA) has freed cryptocurrency companies from obtaining a state-issued Money Transmitter License (MTL).

This was against the backdrop of the conclusion of the Digital Currency Innovation Lab (DCIL) project on June 30.

Indeed, the DCIL was launched in 2020 to explore the digital currency landscape in Hawaii and evaluate necessary regulatory frameworks for crypto companies.

It would seem that the project has achieved its aim to create a balance between fostering innovation and ensuring consumer protection.

However, cryptocurrency firms must still adhere to federal regulations even when the state exemption removes a significant regulatory burden.

These include compliance with the Financial Crimes Enforcement Network (FinCEN), the Securities and Exchange Commission (SEC), and the Financial Industry Regulatory Authority (FINRA).

Additionally, firms must follow federal consumer protection and anti-money laundering (AML) requirements.

Obtaining an MTL requires substantial investment in resources, including maintaining permissible investments, ensuring a minimum net worth, and developing a robust compliance program.

These requirements vary by state, causing inconsistencies and making it challenging for businesses to navigate the regulatory landscape.

Iris Ikeda, the banking commissioner involved with DCIL, highlighted the importance of consumer awareness regarding cryptocurrency risks.

She emphasized the need for the public to stay informed about the potential dangers associated with digital currencies.

The Federal Bureau of Investigation (FBI) recently issued warnings about new criminal schemes targeting cryptocurrency users.

The FBI advises consumers to be cautious of crypto recovery service advertisements, safeguard their personal information, and avoid unregistered money-transmitting services.

This regulatory change in Hawaii aims to streamline operations for cryptocurrency firms while maintaining a strong emphasis on federal compliance and consumer protection.