H.B. 1261 Summary

• Establishes a licensing program for special purpose digital currency companies in Hawaii, requiring registration with the Nationwide Multistate Licensing System (NMLS) and compliance with anti-money laundering, cybersecurity, and consumer protection standards.

• Initial application fee of $9,000 with annual renewal fees of $1,000, plus quarterly transaction-based fees ranging from $2,500 to $12,500 depending on transaction volume, and a minimum $500,000 surety bond requirement.

• Requires licensees to maintain a minimum tangible net worth of $500,000, establish comprehensive recordkeeping systems for transactions, and provide consumer disclosures regarding fees, insurance coverage, transaction irrevocability, and that digital currency is not money.

• Allows companies participating in the existing digital currency innovation lab to continue operations for six months after submitting complete license applications by March 1, 2024, providing transition period to new regulatory framework.

• Grants the Commissioner of Financial Institutions broad enforcement authority including investigation, examination, suspension, revocation, civil penalties up to $10,000 per violation, and criminal penalties for operating without a license or making false statements.