HONOLULU (KHON2) — Cryptocurrency could be coming to an end in the islands.
That’s if the legislature doesn’t pass new legislation. Digital currency has become a nearly $1 billion industry in the state, but trading things like Bitcoin could become illegal if the pilot program that allows it to operate outside of strict laws is not replaced with a new law.
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Cryptocurrency is based on blockchain technology, which is akin to a ledger with digital information that is encrypted to be secure. Instead of being used for goods and services, for now, cryptocurrency is mostly used as an asset for investing. Some analogies for digital currency are things that appreciate value like precious metals and baseball cards.
Hawaii’s Department of Commerce and Consumer Affairs made a ruling in 2016 that cryptocurrencies were regulated as money transmitters, essentially blocking them from trading.
“Right now we’re treating cryptocurrency exchanges companies that turn US dollars to Bitcoin or other types of digital currencies as money transmitters that are like Western Union. Because of that classification, most of these exchanges do not want to operate or service customers in Hawaii,” tech expert Ryan Ozawa said.
A two-year pilot program to allow 15 exchange companies to operate in Hawaii has led to approximately 61,000 local investors and almost $1 billion in transactions. Time is of the essence for the legislature to act. That program is scheduled to expire in June.
“If we do not change the law, this session that we’re actually going to have to force those companies to close their accounts for Hawaii customers and withdraw from the state. And we’re basically going to be starting all over again,” Ozawa said.
“We are pretty hopeful that a licensing scheme can be enacted this year or as this particular bill is suggesting that there would be no regulation on digital currency for consumers,” DCCA Commissioner of Financial Institutions Iris Ikeda said.
Still, some are concerned about opening up cryptocurrency trading with its volatility. Just last month cryptocurrencies hit a big dip and lost $205 billion in a single day. Regulation will be a hot topic of discussion moving forward both locally and federally.
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The state is also looking at creating a cryptocurrency task force. Both that bill and the bill to remove virtual currency passed Monday’s hearing in the state senate with amendments.