Hawaii says Aloha to crypto, as its new crypto sets the groundwork for the island to be the next crypto hub

Hawaii is rapidly emerging as a major player in the cryptocurrency sector, thanks to its updated regulations that redefine the management of digital assets.

The State of Hawaii and the administration of governor Josh Green have recently announced on its government website that crypto companies will no longer need to secure a money transmitter license to operate in Hawaii, distinguishing it from most other U.S. states.

Funny enough, this news was not noticed for over a week before the media started picking up on this news. This is quite the turn around for the second worst U.S state for crypto, as ranked by media outlet, The Ascent.

While cryptocurrency wasn't technically illegal in Hawaii, Hawaii determined years ago that crypto exchanges like Binance of Coinbase were under the same classification as money transferrers. Under that classification, these companies were required to keep cash reserves equal to the assets they were holding for customers.

This regulatory change is attracting notable blockchain firms. MetaMask and Transak have already established a presence in Hawaii, capitalizing on the state’s more accommodating environment. Bryan Keane, U.S. compliance officer at Transak, views this as a pivotal moment, noting, “Hawaii’s recent decision could position it as a major crypto hub, aligning seamlessly with the expanding Web3 community here.”

Hawaii to become a key market for crypto adopters

Hawaii's previously less crypto-friendly stance began to shift with the introduction of the Digital Currency Innovation Lab (DCIL) in 2019. This sandbox initiative allowed blockchain firms to operate and innovate in a regulated environment. The program wrapped up in June, shortly before the state clarified that crypto operations are not deemed money transmission.

This regulatory clarity has attracted leading Web3 companies like BitPay and Trust Wallet, with Transak officially launching in Hawaii on September 12. Keane suggests that this new framework makes Hawaii an appealing market for the broader crypto ecosystem. “These changes position Hawaii as a prime location for crypto innovation,” he said.

Small businesses are also benefiting from the new regulations. Unlike the intricate requirements for a money transmitter license in other states, Hawaii’s simplified approach makes it easier for smaller firms to enter the market. The relaxed rules have already encouraged Coinbase to expand its services in Hawaii, underscoring the state’s increasing importance in the crypto landscape.