A pair of bills that would provide state regulatory support for “virtual currencies” successfully passed their final committee hearings in their respective chambers last week.
A joint hearing of the Senate Committees on Ways and Means and Commerce and Consumer Protection on Thursday discussed Senate Bill 2695, which would, if passed, establish a “Blockchain and Cryptocurrency Task Force” to review data and potential legislation regarding cryptocurrency and related technologies in order to submit recommendations for the 2023 legislative session.
At the same time, House Bill 2108 passed the House Finance Committee. That bill would establish a pilot program for licensing and oversight of cryptocurrency companies in Hawaii.
In 2020, the state opened a two-year “sandbox” program that allows companies to conduct virtual currency transactions without obtaining a money transmitter’s license. Outside of that sandbox, the state Money Transmitters Act requires that licensed money transmitters have the same amount of case on hand as they have invested in any financial instrument, including cryptocurrency, which is cost-prohibitive for widespread crypto adoption in Hawaii.
With that sandbox expiring in June, testifiers told the committees that establishing a framework to permit crypto transactions is imperative.
“I believe the crypto, digital currency, and blockchain space will be as transformative to communities and technologies as the advent of the internet nearly 30 years ago,” wrote Ryan Ozawa of Hawaii’s Digital Currency Innovation Lab to the House Finance Committee.
Both bills were met with general support from testifiers, and SB 2695 passed with little discussion.
However, HB 2108 received some pushback not from people opposed to cryptocurrency — an often controversial technology rife with scams and high energy and environmental costs — but from crypto advocates concerned that it is overly complex and would place burdensome regulations on crypto companies.
In particular, Joe Kent, executive vice president of the Grassroot Institute of Hawaii, wrote that the bill still requires crypto companies seeking license in the state to have a “tangible net worth” of at least $500,000, and to pay an annual fee of $50,000, which he said are unreasonably high barriers to entry.
Katie Jackson, who introduced herself as a blockchain advocate, wrote that the bill, if passed as is, would “put Hawaii dead last in the nation on crypto regulation,” adding that it would place undue surveillance on private citizens because companies would be required to create centralized databases of users’ financial transactions.
However, the House Finance Committee ultimately voted to pass HB 2108 unamended.
Both bills now only need to pass final reading in their respective chambers before moving to the opposing chamber.
Meanwhile, the Senate Ways and Means Committee will vote Wednesday on Senate Bill 3025, a bill functionally very similar to HB 2108.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.