Hawaiian Bill Would Let Banks Act as Crypto Custodians

Hawaiian lawmakers have submitted a bill that allows banks to provide custody for digital assets.

AccessTimeIconJan 23, 2020 at 9:00 p.m. UTC
Updated Aug 19, 2021 at 12:25 a.m. UTC

Presented By Icon

Election 2024 coverage presented by

Stand with crypto

Hawaiian lawmakers have submitted a bill that allows banks to provide custody for digital assets.

SB2594, introduced on Jan. 18 with bipartisan backing, would make it legal for Hawaiian banks to hold “digital securities,” “virtual currencies,” “digital consumer assets” and other “open blockchain tokens” for their customers. It would further authorize Hawaiian courts to hear digital asset claims.

  • Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
    13:18
    Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
  • Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
    05:10
    Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
  • The first video of the year 2024
    04:07
    The first video of the year 2024
  • The last regression video of the year 3.67.0
    40:07
    The last regression video of the year 3.67.0
  • State Senators Gil Riviere (D-23), Sharon Moriwaki (D-12), Stanley Chang (D-9), Les Ihara (D-10) and Kurt Fevella (R-19) sponsored the bill.  

    In effect, the bill could clear the way for Hawaiian banks to offer digital services alongside their existing ones. U.S. banks have long balked at touching bitcoin and other cryptocurrencies, fearing regulatory uncertainties and the assets’ at times illicit associations could spell trouble down the line.

    But the troubles go a step further in Hawaii, where even crypto-focused money services struggle to function. That’s because the Hawaii Division of Financial Institutions requires crypto-licensed entities hold fiat reserves equal to their virtual currency holdings, a decision Coinbase said led to its shuttering of operations in the state in 2017.

    This legislative effort does not appear to end the “double reserve” problem, as Coinbase has called it. But it would, conceivably, give some legal clarity to Hawaiian banks. 

    The bill’s language describes a low-cost, at times pro-consumer custodial system that could come online 60 days after passage. Banks would be required to pay a $1 annual fee and hire an independent accountant to examine their digital books.

    Customers could also authorize their custodians to transact with their digital assets. They would need to agree to the “source code version” the banks would utilize, with statutory ambiguities “resolved in favor of the customers.”

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information have been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. CoinDesk has adopted a set of principles aimed at ensuring the integrity, editorial independence and freedom from bias of its publications. CoinDesk is part of the Bullish group, which owns and invests in digital asset businesses and digital assets. CoinDesk employees, including journalists, may receive Bullish group equity-based compensation. Bullish was incubated by technology investor Block.one.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.