Hawaii's Billion-Dollar Crypto Sector Could Disappear If Legislators Do Not Pass New Laws
Source: Pixabay

Hawaii has some of the strictest crypto laws in the US. Under existing laws, crypto exchanges are treated as money transmitters in the state. Consequently, most major exchanges, concluding Coinbase, do not offer their services in the state. Despite these restrictions, the state’s crypto industry is estimated to be worth around $1 billion. However, the industry could disappear unless legislators act soon.

Why Hawaii’s Crypto Sector Is In Danger

In 2016, Hawaii’s Department of Commerce and Consumer Affairs (DCCA) classified crypto exchanges as money transmitters, essentially making crypto trading illegal in the state. However, two years ago, the departments launched a pilot program to allow crypto exchanges to operate in the state. Under the scheme, 15 crypto exchanges were able to operate outside of the strict restrictions. These exchanges have been offering their services to around 61,000 locals. Thus far, the sector has grown into a $1 billion industry. However, that program is set to end in June 2022.

Legislators Need To Act Fast

There are currently seven bills going through the state capital. These bills will breathe life into the state’s crypto sector, making it friendlier to crypto exchanges. However, these bills have not been passed yet. If they are not passed, all crypto exchanges operating in the state would have to cease all operations.

During an interview with Hawaii’s KHON2, the DCCA Commissioner of Financial Institutions, Iris Ikeda said they were hopeful that a licensing scheme could be enacted this year. Ikeda noted that under the proposed changes to the law, there would be no restrictions on the use of digital currencies for consumers.

Under Hawaii’s proposed crypto laws, state agencies would be empowered to accept crypto transactions as payment for services. Besides that, the bills would allow for the creation of a crypto task force to regulate crypto transactions in the state. Thus far, the bills have passed through the initial hearings with amendments.

There Are Concerns

While the bills have received support in the legislature, there are still those that are worried about allowing crypto trading in the state. Their main concern is regarding the volatility of the crypto sector. For instance, they note that in January, the crypto markets lost $205 billion in a single day.

Crypto Regulation Across The US

Crypto regulation remains a hot topic both at the state and federal levels in the US. However, crypto trading is not banned by any state in the US. For tax purposes, the IRS treats crypto as property. This is in line with how most states treat crypto.

However, some states are more welcoming of the crypto sector than others. For instance, Florida is considered to be one of the most crypto-friendly states in the US. The state’s governor has even proposed allowing businesses to pay their state taxes in crypto.

Besides states, some city governments have also been quite welcoming of crypto. One example of this is New York, where the new mayor Eric Adams has promised big things for the crypto sector.

Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. The information has been obtained from sources we believe to be reliable; however, no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the cryptocurrency they discuss. The information and content are subject to change without notice. Visionary Financial and its affiliates do not provide investment, tax, legal, or accounting advice.

This material has been prepared for informational purposes only and is the opinion of the author, and is not intended to provide, and should not be relied on for, investment, tax, legal, accounting advice. You should consult your own investment, tax, legal, and accounting advisors before engaging in any transaction. All content published by Visionary Financial is not an endorsement whatsoever. Visionary Financial was not compensated to submit this article Please also visit our Privacy policy; disclaimer; and terms and conditions page for further information.