Hawaii is set to take a significant step towards cryptocurrency adoption, after the state’s governor announced that it would be launching a testing program for digital currencies.
On March 17, the Governor of Hawaii revealed that his office had launched the “Digital Currency Innovation Lab,” which will serve as a cryptocurrency and blockchain incubator for running models for a possible state-backed digital asset.
Protection for Sandbox Participants
As the press release confirmed, the Lab is the result of a collaboration between the state’s Department of Commerce and Consumer Affairs, the Division of Financial Institution (DFI), and the Hawaii Technology Development Corporation (HTDC). It will run for two years, and will provide a possibility for prospective digital asset issuers to work in Hawaii state without needing to get a mandatory state money transmitter license.
Hawaii is hoping to achieve additional clarity on the issue of digital currencies through the program, and it hopes that the insights gained will help it to develop a set of progressive crypto laws that will guide innovation and also ensure user protection.
Iris Ikeda, Hawaii’s Commissioner of Financial Institutions, also highlighted that the DFI had taken steps to ensure that companies operating in the sandbox will be immune to any regulatory recourse that will usually be reserved for firms operating without getting the right licensing.
She explained that the agency would be using its statutory authority to ensure that digital currency issuers can seamlessly operate in the state, while also ensuring consumer safety and preventing the occurrence of fraudulent activity.
“By acknowledging digital currencies as a transmission vehicle of the future, we will be able to craft legislation that is conducive to its development in Hawaii,” she added.
The state is also hoping that success with this initiative will help to position it at the forefront of digital and financial innovation, thus incentivizing companies in the space to migrate and invest in Hawaii.
A Contrast to what the Federal Government is Doing
While Hawaii seems to be more open to the idea of digital currency, however, the United States as a whole hasn’t been so responsive. Over the past few months, several countries have committed to experimenting with the possibility of their state-backed assets. For some, it’s in line with their mission to improve financial inclusion and optimize their financial systems (such as in Dubai and the UAE) or to stop a possible Chinese dominance of the space (like in Japan).
However, the United States Federal Reserve has been lax in its approach. While there have been whispers here and there that the government might be looking into the prospect of issuing a digital currency, nothing concrete has been reported – as opposed to what’s going on in its chief economic rival, China.
Japan itself has called on the Fed to take the issue of Central Bank Digital Currencies (CBDCs) more seriously and join a consortium of central banks that committed to conducting research at the World Economic Forum earlier this year, but it’s gotten no response for now.
If Hawaii does succeed with this, it could provide the additional push for Uncle Sam to get on board finally.