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.
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