HOUSE OF REPRESENTATIVES	H.R. NO.	115
THIRTY-FIRST LEGISLATURE, 2022
STATE OF HAWAII

HOUSE RESOLUTION

requesting the department of commerce and consumer affairs' division of financial institutions and the hawaii technology development corporation TO extend the digital currency innovation lab pilot project.

WHEREAS, cryptocurrency has grown in popularity and acceptance nationwide, but there is little regulation of the industry; and

WHEREAS, according to the Federal Trade Commission, cryptocurrency is digital money, which is the blanket term used to describe any money-like asset that is primarily managed, stored, or exchanged using internet technology; and

WHEREAS, digital currency does not have a physical form like banknotes or minted coins, are not typically issued or backed by the United States government or any other government or central bank, and are not considered legal tender in most countries; and

WHEREAS, in 2016, the Department of Commerce and Consumer Affairs' Division of Financial Institutions found that digital currency transactions differ from money transmissions and that subjecting digital currency companies, virtual currency companies, and cryptocurrency companies to the licensing and asset reserve scheme under the Money Transmitters Modernization Act under chapter 489D, Hawaii Revised Statutes, made it too burdensome for these companies to do business in the State; and

WHEREAS, the Division of Financial Institutions of the Department of Commerce and Consumer Affairs and the Hawaii Technology Development Corporation have jointly created a two-year sandbox, called the Digital Currency Innovation Lab (DCIL) pilot project, to allow for limited activity of digital currency companies, virtual currency companies, and cryptocurrency companies in the State to better understand the cryptocurrency industry and determine the best method for its regulation and oversight; and

WHEREAS, there are approximately sixty-one thousand digital currency consumers who have completed more than $611,000,000 in transactions with the fifteen cryptocurrency-based companies that have been accepted into the DCIL pilot project; and

WHEREAS, with the termination of the DCIL pilot project on June 30, 2022, these digital currency consumers will have no choice but to empty and close their digital wallets by December 31, 2022; and

WHEREAS, the results of the DCIL pilot program has confirmed the popularity and versatility of digital currency transactions and the need for more comprehensive regulation of digital currency; and

WHEREAS, the Legislature has yet to pass a measure that either exempts digital currency from the Money Transmitters Act or regulates digital currency within the State; now, therefore,

BE IT RESOLVED by the House of Representatives of the Thirty-first Legislature of the State of Hawaii, Regular Session of 2022, that the Department of Commerce and Consumer Affairs' Division of Financial Institutions and Hawaii Technology Development Corporation are requested to extend the Digital Currency Innovation Lab pilot project for another two years or until legislation is enacted that provides for a digital currency licensure program, whichever occurs first; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Commissioner of Financial Institutions and Executive Director of the Hawaii Technology Development Corporation.

OFFERED BY:

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Report Title:

Cryptocurrency; Digital Currency; Division of Financial Institutions; Hawaii Technology Development Corporation; Digital Currency Innovation Lab Pilot Project