On Monday, the Hawaii Department of Commerce and Consumer Affairs (DCCA) was pleased to announce that crypto firms will be exempted from the money transmitter license (MTL).
The decision to allow the crypto firms to operate without the MTL emanated from the research conducted by the Digital Currency Innovation Lab (DCIL). The State of Hawaii formed the DCIL in partnership with the Hawaii Technology Development Corporation (HTDC) and the Hawaii Division of Financial Institutions (DFI).
Crypto Firms Allowed to Operate as Unregistered Businesses in Hawaii
The DCIL conducted the study in collaboration with the DCCA to monitor crypto-related activities in Hawaii. The study commenced in 2020 to explore the regulatory framework for crypto assets.
The DCCA and DCIL implemented various research methods to support the Hawaii government in developing comprehensive regulations for crypto assets.
The DCIL served as a regulatory sandbox, allowing crypto firms to operate under specific rules. The program allows crypto firms to operate without MTL, and 11 companies were selected as a sandbox for the two-year pilot program.
Subsequently, the DCCA monitored the crypto activities to identify the market needs. The DCCA was required to identify the regulatory gaps in the crypto sector and address them accordingly.
The two regulatory agencies noted that the MTL rule did not favor crypto-related activities. Initially, the Hawaii authority implemented the MTL rules to protect consumers from exploitative practices.
Hawaii Financial Regulators Exempt Crypto Firms from MTL
The MTL requirements are applicable in the United States since the form basis in federal law governing payment companies’ operations.
Similar to the US, the MTL requirements were complex and costly, forcing some investors to expand to regions with friendly regulations.
The local crypto firms were required to submit relevant documents showing their investment, net worth, business plans, and compliance structure when applying for the MTL permit.
The MTL regulation has faced a tide of criticism for stifling business growth. With the removal of MTL rules, the Hawaii regulators believe that changes will streamline the regulatory approach for digital assets.
Crypto Firms to Comply with Federal Regulation in Hawaii
According to the press release, the DCCA confirmed that crypto firms could operate as unregulated businesses.
Hiwever consumer regulator stated that the local exchange would be required to comply with the federal laws governed by the Hawaiian financial regulators, such as the Financial Crime Enforcement Network (FinCEN)and the Securities and Exchange Commission (SEC).
The DCCA explains that local and foreign crypto firms must comply with international anti-money laundering (AML) requirements and consumer protection measures.
The removal of the MTL rule will encourage fast-paced crypto exchanges to expand their geographical presence in Hawaii. For months, the renowned crypto payment company Alchemy Pay has sought to obtain the MTL permit to expand its market presence in the region.
The financial regulators believed that exempting crypto firms from MTL requirements would encourage innovation in the digital world. An announcement conveyed by the DCIL banking commissioner Iris Ikeda advocated sensitizing consumers on the risk associated with crypto assets.
The commissioner advised the public to be up to date with current trends in the digital world. As the Hawain financial regulators completed the two-year study on crypto assets, Ikeda urged the authorities to invest in creating awareness about the subject matter.
The commissioner advised the DCCA to invest in education programs to sensitize the public on risks associated with digital assets. Ikeda noted that criminals have been looming to steal from the customer in customers.
The commissioner’s early warning came when the Federal Bureau of Investigation (FBI) cautioned investors about new crypto scams. The law enforcers advise the public to be vigilant when transacting online.
According to the FBI, the public should keep their private information safe and secure and avoid sending money to suspicious accounts. The public has been urged to avoid clicking suspicious links and ads.
The FBI has been warning the public about engaging in unlawful activities that might lead to the loss of substantial amounts of funds.
