The Digital Currency Innovation Lab, a pilot program, will be extended two years to operate until June 30, 2024, according to an announcement by the Hawai‘i Technology and Development Corporation and the state Division of Financial Institutions in the Department of Commerce and Consumer Affairs.
The Digital Currency Innovation Lab (DCIL) was created in 2020 through a partnership to gather data for the purpose of establishing a regulatory scheme and exploring the potential economic opportunities brought about by digital currencies.
With successful admission into the DCIL, digital currency companies are permitted to conduct business in Hawai‘i without obtaining a state money transmitter license.
The extension comes at a critical point in time, with the demise during the 2022 Hawai‘i state legislative session of a bill that called for the licensure of digital currency companies.
Without a licensing scheme in place, the DCIL is scheduled to close on June 30, 2022. As of December 31, 2021, there were approximately 134,000 Hawai‘i consumers who transacted over $800 million in digital currencies through participating companies in the DCIL.
In an effort to mitigate consumer harm and enable the continuation of digital currency activity in the state, the Division of Financial Institutions and the Hawaiʻi Technology and Development Center have pulled resources together to extend the pilot program.
“We are relieved for the opportunity to extend the DCIL for participating companies and consumers,” said Iris Ikeda, Commissioner of Financial Institutions. “A number of puzzle pieces had to fit together in order to make the new DCIL happen, but I am glad we are able to pull it off.”
Len Higashi, Acting Executive Director of the Hawai’i Technology and Development Corporation said the lab has proven to be an economic driver.
“We recognize the potential it brings for the future of Hawai‘i,” he said. “The continuation of the DCIL will provide us opportunities to build on the progress we have achieved over the past two years.”
Existing participating companies have the option to continue in the extended DCIL, subject to the acceptance of a new agreement and additional fees. Companies who choose to withdraw from the program will have to abide by the terms of the DCIL and commence its wind-down procedures starting on July 1, 2022 and concluding on December 31, 2022.
In due course, the DCIL also will start accepting applications from new digital currency companies who seek to be considered for admission into the pilot program.
“This move to extend the digital currency pilot is fully in keeping with legislative intent to support the growing and dynamic industry as Hawai‘i and the nation best explore how to effectively balance consumer choice and financial innovation with consumer protection,” said Representative Aaron Ling Johanson (House District 31), chair of the House Committee on Consumer Protection & Commerce. “This extension gives Hawai‘i the needed time to arrive at an ideal mutually agreeable solution.”
“I am supportive of today’s decision to extend the DCIL until June 30, 2024, which will allow for the more than 134,000 Hawai‘i residents who participated in the pilot program to not only continue digital currency activity in the state, but hold on to the over $800 million in digital currencies transacted during this time,” said Senator Bennette E. Misalucha (Senate District 16), vice chair of the Senate Committee on Energy, Economic Development and Tourism. “Many of our residents have shared concerns over the past month on the future of digital currencies and what would happen to all of their investments made, so this decision will allow us to continue the conversation on how to best regulate this growing industry and reduce consumer harm.”
Although a number of measures were introduced during the recent legislative session, including several licensure bills (HB2108/SB3076), none survived except for SB2695 SD2 HD1 CD1, introduced by Senator Misalucha. This bill establishes a blockchain and cryptocurrency task force with the intent to complete its work by 2024. The bill has been enrolled to Governor Ige, who has until June 27, 2022, to signify his intentions.
“We are convinced about the bright future of crypto commerce even as a possible economic diversification strategy for the state. We believe that the task force established by SB2695, will allow a collaborative approach amongst state, industry and community stakeholders to recommend an appropriate regulatory framework so the industry can continue on its trajectory of growth,” said Senator Misalucha.
For more information about the DCIL, visit the website at www.htdc.org/digital-currency-innovation-lab