Aug 19, 2020 at 20:05 UTCUpdated Aug 19, 2020 at 21:05 UTC
Crypto is returning to Hawaii. (IShutterstock)
U.S. exchanges ErisX and bitFlyer are among 12 crypto firms selected to pilot Hawaii’s digital currency regulatory sandbox that will allow virtual asset service providers to do business in the state without obtaining a money transmitter license for a two-year period, the companies announced Wednesday.
- The pilot program, offered through the Digital Currency Innovation Lab, a partnership between Hawaii’s Department of Financial Institutions (DFI) and Hawaii Technology Development Corporation (HTDC), marks the return of crypto firms to the state and is the first regulatory sandbox of its kind in Hawaii, according to a statement from ErisX.
- Although the DFI didn’t exactly ban crypto when the state implemented the “double-reserve requirement” in 2017 – which required companies to hold reserves in fiat currencies matching the amount of crypto held by their clients – exchanges like Coinbase said “aloha” to the state, leaving because they saw the requirement as a costly burden.
- But in January 2020, Hawaii introduced a bill that would allow financial institutions to hold digital assets.
- In March, the state went a step further to potentially relax the stringent rules for virtual asset service providers by launching the Digital Currency Innovation Lab to address the heavy regulatory requirements and “create economic opportunities for Hawaii through early adoption of digital currency.”
- According to ErisX General Counsel Laurian Cristea, following the launch of the lab, Hawaii invited crypto firms to apply for participation in the pilot program.
- With the addition of Hawaii, ErisX, which pioneered crypto futures trading in the U.S., is now operational in 49 out of 53 possible U.S. states and territories, according to the exchange.
- In a statement to the press, global crypto exchange bitFlyer, whose U.S. affiliate is headquartered in San Francisco, said the “sandbox initiative marks the return of crypto exchanges to Hawaii, with the ultimate goal of seeing exchanges such as bitFlyer promoted to full licensees in the future.”
- The full list of participants includes BlockFi, CEX.io, Apex Crypto, Cloud Nalu, Coinme, Flexa, Gemini, Novi, River Financial and Robinhood Crypto.
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