The Division of Financial Institutions, Department of Commerce and Consumer Affairs (“DFI”), and Hawaii Technology and Development Corporation (“HTDC”) today announced a two-year extension of the Digital Currency Innovation Lab (“DCIL”), allowing the pilot program to operate until June 30, 2024.
The extension comes at a critical point in time, as a pivotal bill that provided for the licensure of digital currency companies died during the recent 2022 Hawaii state legislative session. Without a licensing scheme in place, the DCIL was expected to close on June 30, 2022.
The DCIL was created by DFI and HTDC 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 Hawaii without obtaining a state money transmitter license.
As of December 31, 2021, there were approximately 134,000 Hawaii 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 DFI and HTDC have managed to pull 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,” said Commissioner Ikeda.
“The DCIL has proven itself to be an economic driver and we recognize the potential it brings for the future of Hawaii,” said Len Higashi, Acting Executive Director, HTDC. “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 will also start accepting applications from new digital currency companies who seek to be considered for admission into the pilot program.
For more information about the DCIL, visit the website at www.htdc.org/digital-currency-innovation-lab
Conference committee leads respond
Following the announcement, the leaders of the conference committee that deferred the licensing bill — Rep. Aaron Johanson and Sen. Bennette Misalucha — released a joint statement describing the extension as “fully in keeping with legislative intent.”
“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,” Sen. Misalucha wrote.
Notably, Commissioner Ikeda had said that Hawaii faced “great consumer harm from closing down the DCIL,” the expected result after HB2108 failed.
Misalucha’s own bill, SB2695, was the only crypto legislation to make it to the governor’s desk. If signed, a blockchain and cryptocurrency task force will be formed to further research the space and ultimately develop another licensing or other regulatory scheme. Like the DCIL extension, the task force is expected to wrap up its work in 2024.