Hawaii Softens Restrictions on Regulatory Sandbox to Allow Entry of Crypto Companies

The state’s Digital Currency Innovation Lab has opened its doors to allow more crypto companies to register till the February 26 deadline. Cryptocurrencies are now back in Hawaii. More crypto firms can now join the state’s no-license-necessary crypto sandbox. On Monday, Hawaii announced that applications are now open for crypto companies interested in the Digital Currency Innovation Lab (DCIL), giving a ray of hope that more service providers and crypto platforms will establish businesses the state known to be very strict and restrictive to cryptocurrencies.

Hawaii to accommodate more crypto firms in the regulatory sandbox

Hawaii’s law mandates crypto companies to retain cash reserves equal to their digital asset holdings, a very stringent condition for small and large crypto exchanges. However, sandbox beneficiaries are exempted from the requirement. Likewise, they are not required to obtain the regular money transmitter license until June next year.

In his remark, one of the sandbox beneficiaries’ applicants described the procedure as “seamless.” A local blockchain owner, Liam Grist, confirmed the director’s position. According to Grist, people are now more attracted to Bitcoin than ever before as the demand keeps soaring not only in Hawaii but in the entire United States. The leniency introduced to the digital asset regulations will allow more bitcoin brokers like Cloud Nalu to launch their business in Hawaii. In February, Nalu will establish his brokerage in the state.

In March 2020, Hawaii joined other states implementing the regulatory sandbox to attract crypto businesses. The announcement was made by when the government launched the Digital Currency Innovation Lab to regulate crypto-related businesses.

The pilot project will last for two years as approved firms authorized to do businesses using cryptocurrencies instead of the Money Transmitter License issued by the government. The launch of this policy was announced following the state’s senate’s permission to banks to keep digital currencies for their customers.

Procedures for Application

Crypto companies who want to apply are required to submit their financial statements depending on their business structure. Corporations must provide their last audited financial statements and the previous two years.

In addition to the financial statements, applicants must submit their anti-money laundering documents regarding the entities’ owners. Apart from the first and annual fees, there are other requirements applicants must fulfill, such as yearly reports to the DFI at the end of every year.

In a statement released by the state’s Development Corporation, the director noted that the program would have started last year but was hindered by the outbreak of COVID-19. However, he added that applicants now show enthusiasm more than before.

The state’s pilot project reflects the state’s changing policies and soft stance towards the crypto markets. The 2017 policy made it compulsory for crypto firms to hold the same amount of fiat currencies as digital currencies scared cryptocurrencies away from the state. Earlier, the DFI used to sanction entities engaging in unregulated money exchange activities. But now, businesses will gain from the “no action” policy launched by the DFI to favor crypto businesses.