STAND. COM. REP. NO. 3964

Honolulu, Hawaii

RE: H.B. No. 2108

H.D. 1

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 2108, H.D. 1, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO SPECIAL PURPOSE DIGITAL CURRENCY LICENSURE,"

begs leave to report as follows:

The purpose and intent of this measure is to establish a program for the licensure, regulation, and oversight of digital currency companies.

Your Committee received written comments in support of this measure from the Department of Commerce and Consumer Affairs, Hawaii Technology Development Corporation, Cloud Nalu, and five individuals.

Your Committee received written comments in opposition to this measure from one individual.

Your Committee received written comments on this measure from the Grassroot Institute of Hawaii.

Your Committee finds that, although digital currency has grown in popularity and acceptance worldwide, there is little regulation of the industry in the United States, with a few states treating digital currency activities as within the scope of their money transmitter laws. Your Committee also finds that a study conducted by the Department of Commerce and Consumer Affairs and the Hawaii Technology Development Corporation determined that digital currency transactions are not best regulated through existing money transmitter laws and that a new regulatory framework is appropriate.

Your Committee has amended this measure by:

(1) Clarifying the requirements and parameters of the anti‑money laundering program to facilitate compliance with the federal Anti-Money Laundering Act of 2020 and any future regulations that may be promulgated by the United States Department of the Treasury's Financial Crimes Enforcement Network;

(2) Clarifying the requirements of the cybersecurity program to incorporate cybersecurity-related principles from the Federal Financial Institutions Examination Council and National Institute of Standards and Technology Cybersecurity Framework; and

(3) Making technical nonsubstantive amendments for purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2108, H.D. 1, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 2108, H.D. 1, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

________________________________

DONOVAN M. DELA CRUZ, Chair