Relating To Special Purpose Digital Currency Licensure.
The bill would amend Hawaii Revised Statutes by introducing a dedicated chapter that outlines the licensure, regulation, and oversight mechanisms applicable to digital currency companies. It provisions the creation of a licensing program under the Division of Financial Institutions within the Department of Commerce and Consumer Affairs. By doing so, it is intended to provide greater consumer protection, ensure transaction transparency, and enhance the oversight of financial institutions engaged in digital currency activities. The bill also appropriates $500,000 for implementation in the fiscal years 2023-2024 and 2024-2025.
House Bill 790, introduced in the Hawaii Legislature, aims to establish a regulatory framework for special purpose digital currency companies through a licensing system. This bill recognizes the growing significance of digital currencies—such as cryptocurrencies and e-money—and underscores that current regulatory practices do not adequately address the unique nature of these digital assets. The legislation is a response to the findings of the Digital Currency Innovation Lab, which indicated that existing money transmitter laws are not suitable for overseeing digital currency transactions.
One point of contention surrounding HB 790 involves the implications for control and custody of digital assets. The bill specifies that digital currencies held by a licensee are not considered the property of the licensee and are protected from claims by the licensee's creditors. This aspect may raise concerns among traditional financial institutions regarding competition and the risks associated with the volatility of digital currencies. Furthermore, the distinction between digital currency and money underscores a philosophical debate on the recognition of digital assets within financial systems, which could have broader implications on economic policies and consumer behavior.