Hawai‘i digital currency innovation lab concludes | Big Island Now

The state Department of Commerce and Consumer Affairs, along with the Hawaiʻi Technology Development Corporation, is reminding the public to be aware of the risks of investing in cryptocurrency, as its Digital Currency Innovation Lab concludes at the end of the week.

The Digital Currency Innovation Lab (DCIL) concludes on Sunday, June 30. The project has began in 2020 to “explore the landscape of digital currency activity within the state, while assessing the regulatory framework required for companies specializing in digital currency (also known as cryptocurrency), the department said.

As stated by the department in a recent press release:

The findings from the project indicate that digital currency companies will no longer require a Hawai‘i-issued money transmitter license to conduct business within the state. The companies will be able to continue transaction activity as an unregulated business.

However, such companies will be responsible for complying with any applicable federal licensing or registration requirements, including those set forth by the Financial Crimes Enforcement Network, Securities and Exchange Commission, and the Financial Industry Regulatory Authority, as well as any pertinent federal regulatory requirements involving consumer protection, anti-money laundering measures, etc.

“As we transition from this study to a broader understanding of digital currency, our focus will remain on ensuring that consumers are aware of the risks associated with this matter. We urge the public to stay informed when utilizing any form of digital currency,” said Banking Commissioner Iris Ikeda.

Digital currency companies operating in Hawai‘i should continue to adhere to federal regulations relevant to their activities. Consumers are encouraged to remain vigilant and proactive when dealing with digital currency companies and unregulated markets.

This week, the Federal Bureau of Investigation issued a warning about a new tactic used by criminals to defraud victims of cryptocurrency scams. Fraudsters are posing as lawyers from fake law firms on social media and messaging platforms, offering to help victims recover their funds.

They claim to be authorized to investigate such cases and may reference involvement with the FBI, Consumer Financial Protection Bureau, or other government agencies to appear legitimate. Between February 2023 and February 2024, victims of cryptocurrency scams exploited by these fictitious law firms, reported losses exceeding $9.9 million to the FBI’s Internet Crime Complaint Center (IC3).

TIPS TO PROTECT YOURSELF

• Be wary of advertisements for cryptocurrency recovery services. Research the advertised company and beware if the company uses vague language, has a minimal online presence, and makes promises regarding an ability to recover funds.
• If an unknown individual contacts you and claims to be able to recover stolen cryptocurrency, do not release any financial or personal identifying information and do not send money.
• Law enforcement does not charge victims a fee for investigating crimes. If someone claims an affiliation with the FBI, contact your local FBI field office to confirm.

The FBI also issued an alert advising the public against using cryptocurrency money transmitting services that are not registered as Money Services Businesses (MSB) according to United States federal law. Cryptocurrency money transmitting services are being investigated and law enforcement operations were conducted against cryptocurrency services which were not licensed in accordance with federal law. Using a service that does not comply with its legal obligations may put you at risk of losing access to funds after law enforcement operations target those businesses.

Victims of cryptocurrency schemes or other fraudulent schemes are encouraged to file a report with the FBI’s Internet Crime Complaint Center at www.ic3.gov.

Guidance and additional information from the Federal Trade Commission on ‘What to Know About Cryptocurrency and Scams’ is available at https://consumer.ftc.gov/articles/what-know-about-cryptocurrency-and-scams.

More information on the Digital Currency Innovation Lab is available at https://www.htdc.org/digital-currency-innovation-lab/.