Hawaii is likely to become the next state in the U.S. to pass legislation directly aimed at cryptocurrencies.
A bill is in the last stages of consideration before heading to the governor’s desk to be signed into law. On Friday, the legislation, Senate Bill 3082, had been signed off on by the House’s
Consumer Protection and Commerce.
Next up? The House Finance committee, and then the governor.
Not so warm greeting for crypto players
The official name of the legislation is Uniform Regulation of Virtual Currency Businesses Act. It amends the state’s Money Transmitters Act to “expressly apply to persons engaged in the transmission of virtual currency.”
It would require brokers to obtain a specific license that calls for them to provide a warning to consumers prior to entering into crypto agreements with them. This license would mean that brokers would have to make full disclosures to Hawaiians before allowing for transactions to take place.
Hawaii has already tested the waters for cracking down on the crypto space with this same money transmitters’ law, and it cost them Coinbase.
In 2016, Hawaii’s Division of Financial Institutions found this transmitters’ law also applied to virtual currency brokers. Coinbase became swept up in this logic.
At that time, Coinbase stated in a blog post that it had no objection to the policy. It added that it had submitted a comprehensive application for licensure in Hawaii way back in 2014.
While it thought that it was adhering to Hawaii’s requirements, it was wrong, as informed later by the state. The state’s Division of Financial Institutions imposed a policy that Coinbase found would set Hawaii apart from “nearly every other state in the U.S.”
So outrageous was the policy for Coinbase that it stopped doing business in the state last year.
Noted in the blog post:
Coinbase and other digital currency businesses will be required to maintain cash reserves (or similar, liquid assets referred to as “permissible investments”) in an amount equal to the aggregate face value of digital currency funds held on behalf of customers. In other words, if Coinbase holds one bitcoin for a Hawaii customer, the practical outcome of this policy will require Coinbase to also hold the equivalent cash value of that bitcoin, currently well over $1,000, as redundant collateral.
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