STAND. COM. REP. NO. 3135

Honolulu, Hawaii

RE: S.B. No. 3025

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 S.B. No. 3025, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO DIGITAL CURRENCY LICENSING PROGRAM,"

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 Hawaii Technology Development Corporation and eleven individuals.

Your Committee received written comments in opposition to this measure from Coin Center, Libertarian Party of Hawaii, and two individuals.

Your Committee received written comments on this measure from the Division of Financial Institutions of the Department of Commerce and Consumer Affairs, Electronic Transactions Association, Grassroot Institute of Hawaii, and one individual.

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 High 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 definition of the term "digital currency business activity";

(2) Removing a reference to the Electronic Fund Transfer Act of 1978; and

(3) Clarifying the financial institutions that are exempt from the digital currency licensing program established by this measure.

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 S.B. No. 3025, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 3025, S.D. 2.

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

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DONOVAN M. DELA CRUZ, Chair