SB2757 • 2026

RELATING TO DIGITAL ASSET CHARTERS.

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Sponsor: KEOHOKALOLE, CHANG, HASHIMOTO, RICHARDS, Wakai
Last action: 2026-03-17
Official status: The committee(s) on CPC recommend(s) that the measure be deferred.
Effective date: Not listed

Plain English Breakdown

Using official source text because the generated explanation was unavailable or could not be confirmed against the official bill text.

RELATING TO DIGITAL ASSET CHARTERS.

What This Bill Does

RELATING TO DIGITAL ASSET CHARTERS.
DCCA; DFI; Digital Asset Companies; Digital Asset Charter; Appropriation ($) Establishes within the Department of Commerce and Consumer Affairs' Division of Financial Institutions, beginning 1/1/2027, a digital asset charter program for licensing, regulating, and overseeing digital asset companies and digital asset business activities.
Authorizes companies that participated in the Hawaii Digital Currency Innovation Lab to temporarily continue digital asset business activities without a charter in certain circumstances.
Appropriates moneys from the compliance resolution fund.

Limits and Unknowns

This entry is temporarily using official source text because the generated explanation could not be confirmed against the official bill text during the last sync.

Amendments

These notes stay tied to the official amendment files and metadata from the legislature.

SD1

Hawaii published version SD1

Plain English: SB2757 SD1 THE SENATE S.B.

SB2757 SD1 THE SENATE S.B.
NO.
2757 THIRTY-THIRD LEGISLATURE, 2026 S.D.
1 STATE OF HAWAII A BILL FOR AN ACT RELATING TO DIGITAL ASSET CHARTERS.

SD2

Hawaii published version SD2

Plain English: SB2757 SD2 THE SENATE S.B.

SB2757 SD2 THE SENATE S.B.
NO.
2757 THIRTY-THIRD LEGISLATURE, 2026 S.D.
2 STATE OF HAWAII A BILL FOR AN ACT RELATING TO DIGITAL ASSET CHARTERS.

Bill History

2026-03-17 H
The committee(s) on CPC recommend(s) that the measure be deferred.
2026-03-12 H
Bill scheduled to be heard by CPC on Tuesday, 03-17-26 2:00PM in House conference room 329 VIA VIDEOCONFERENCE.
2026-03-12 H
Referred to CPC, JHA, FIN, referral sheet 17
2026-03-12 H
Pass First Reading
2026-03-10 H
Received from Senate (Sen. Com. No. 291) in amended form (SD 2).
2026-03-10 S
Report adopted; Passed Third Reading, as amended (SD 2). Ayes, 25; Aye(s) with reservations: none . Noes, 0 (none). Excused, 0 (none). Transmitted to House.
2026-03-06 S
48 Hrs. Notice 03-10-26.
2026-03-06 S
Reported from WAM/JDC (Stand. Com. Rep. No. 2957) with recommendation of passage on Third Reading, as amended (SD 2).
2026-03-04 S
The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in WAM were as follows: 13 Aye(s): Senator(s) Dela Cruz, Moriwaki, DeCoite, Elefante, Hashimoto, Inouye, Kanuha, Kidani, Kim, Lee, C., Richards, Wakai, Fevella; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none.
2026-03-04 S
The committee(s) on JDC recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in JDC were as follows: 5 Aye(s): Senator(s) Rhoads, Gabbard, Chang, San Buenaventura, Awa; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none.
2026-03-02 S
The committee(s) on WAM/JDC will hold a public decision making on 03-04-26 10:35AM; Conference Room 211 & Videoconference.
2026-02-17 S
Report adopted; Passed Second Reading, as amended (SD 1) and referred to WAM/JDC.
2026-02-17 S
Reported from CPN/LBT (Stand. Com. Rep. No. 2274) with recommendation of passage on Second Reading, as amended (SD 1) and referral to WAM/JDC.
2026-02-06 S
The committee(s) on CPN recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in CPN were as follows: 5 Aye(s): Senator(s) Keohokalole, Fukunaga, Lamosao, McKelvey, Awa; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none.
2026-02-06 S
The committee(s) on LBT recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in LBT were as follows: 5 Aye(s): Senator(s) Elefante, Lamosao, Ihara, Moriwaki, Fevella; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none.
2026-02-02 S
The committee(s) on CPN/LBT has scheduled a public hearing on 02-06-26 10:00AM; Conference Room 229 & Videoconference.
2026-01-30 S
Referred to CPN/LBT, WAM/JDC.
2026-01-26 S
Passed First Reading.
2026-01-23 S
Introduced.

Official Summary Text

RELATING TO DIGITAL ASSET CHARTERS.
DCCA; DFI; Digital Asset Companies; Digital Asset Charter; Appropriation ($)
Establishes within the Department of Commerce and Consumer Affairs' Division of Financial Institutions, beginning 1/1/2027, a digital asset charter program for licensing, regulating, and overseeing digital asset companies and digital asset business activities. Authorizes companies that participated in the Hawaii Digital Currency Innovation Lab to temporarily continue digital asset business activities without a charter in certain circumstances. Appropriates moneys from the compliance resolution fund. Effective 7/1/2050. (SD2)

Current Bill Text

Read the full stored bill text

SB2757

THE SENATE

S.B. NO.

2757

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to digital asset CHARTERS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

����
SECTION 1.
�
The legislature finds that the use and
trading of digital assets, including cryptocurrencies, e-money, network money,
e-cash, and other forms of digital currencies, are growing in global popularity.
�
Digital assets have value but may be recorded
in decentralized ledgers or company databases and do not have a physical form like
bank notes or coins.
�
Most digital assets
are not issued by government bodies and are not considered legal tender.
�
Although some states treat digital assets as
falling within the states' money transmitter laws, the industry is largely
unregulated in the United States.

����
The
legislature further finds that in 2020, the Hawaii technology development
corporation partnered with the department of commerce and consumer affairs' division
of financial institutions to conduct a pilot project on digital currencies.
�
The project included the establishment of the
Hawaii digital currency innovation lab to study the landscape of digital
currency activities within the State.
�
The
project's findings indicated that digital asset companies do not require a State‑issued
money transmitter license to conduct business in Hawaii.
�
Although some federal regulations apply to
digital asset activities, the lack of state regulation may place consumers at
risk of fraud and financial abuse.
�
The
legislature believes that the pilot project's findings, and the financial risks
to consumers, support the need for a new state regulatory framework for digital
asset companies and digital asset activities.

����
Accordingly,
the purpose of this Act is to:

����
(1)
�
Establish a digital asset charter
program to license, regulate, and oversee digital asset companies and digital
asset business activities; and

����
(2)
�
Authorize any company that participated
in the Hawaii digital currency innovation lab to temporarily continue conducting
digital asset business activities without a charter, in certain circumstances.

����
SECTION
2.
�
The Hawaii Revised Statutes is
amended by adding a new chapter to be appropriately designated and to read as
follows:

"
Chapter

digital asset CHARTERS

PART i.
�
GENERAL PROVISIONS

����
�
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-1
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Definitions.
�
As used in this

chapter, unless the context otherwise requires:

����
"Charter"
means the digital asset licensure required under this chapter.

����
"Commissioner"
means the commissioner of financial institutions for the department of commerce
and consumer affairs.

����
"Consumer"
means a natural person who engages in a digital asset transaction primarily for
personal, family, or household purposes.

����
"Control
over a digital asset" means the power to execute unilaterally or prevent
indefinitely a digital asset transaction.

����
"Control
person" means a person that directly or indirectly exercises control over
a digital asset.

����
"Department"
means the department of commerce and consumer affairs.

����
"Digital
asset" means an electronically stored unit of value that can be owned,
transferred, or traded.
�
"Digital
asset" includes a digital representation of value that:

����
(1)
�
Has a centralized depository or
administrator, including stablecoins;

����
(2)
�
Is decentralized and has no centralized
depository or administrator; or

����
(3)
�
Is created or obtained by a computing
or manufacturing effort.

����
"Digital
asset" does not include a digital representation of value that cannot be
converted into, or redeemed for, currency or another digital asset but is:

����
(1)
�
Used solely within an online gaming
platform;

����
(2)
�
Redeemable for goods, services,
discounts, or purchases as part of a customer affinity or rewards program offered
by the issuer or another designated merchant; or

����
(3)
�
Accessed via a prepaid card.

����
"Digital
asset administration" means the issuance of a digital asset with the
authority to redeem the digital asset for money, bank credit, or another
digital asset.

����
"Digital
asset business activity" means business activities that involve:

����
(1)
�
Exchanging, transferring, or storing a
digital asset or engaging in digital asset administration, whether directly or
through an agreement with a digital asset control-services vendor;

����
(2)
�
Exchanging one or more digital
representations of value used within an online game, gaming platform, or family
of games for moneys or bank credit outside that online game, gaming platform,
or family of games, if the moneys or bank credit are offered by or on behalf of
the same publisher from which the original digital representation of value was
received;

����
(3)
�
Storing, holding, or maintaining
custody or control of a digital asset on behalf of another person; or

����
(4)
�
Buying or selling a digital asset as a
business; performing exchange services as a business; or controlling,
administering, or issuing a digital asset.

����
"Digital asset company" means a person
or company holding a charter under this chapter to engage in digital asset
business activities.

����
"Digital
asset control-services vendor" means a person that has control of a
digital asset owned by a third party, under an agreement with another person.

����
"Digital
asset wallet" means a tool used to store and manage digital assets that
are not federally insured.

����
"Division"
means the division of financial institutions of the department of commerce and
consumer affairs.

����
"Elder"
means a person who is sixty-two years of age or older.

����
"Examination" means a scheduled
review by the division, not requiring a prior complaint, to verify that the
digital asset company is operating within the law.

����
"Exchange"
means the conversion of:

����
(1)
�
Fiat currency or another asset of value
into a digital asset;

����
(2)
�
A digital asset into fiat currency or
another asset of value; or

����
(3)
�
One form of digital asset into another
form of digital asset.

����
"Fiat
currency" means a government-issued currency that is not backed by a
physical commodity, such as gold or silver.

����
"Investigation" means a review by
the division based on a prior complaint or a report indicating that the company
is not operating within the law or is experiencing financial or other difficulties.

����
"NMLS"
has the same meaning as defined in section 454F-1.

����
"Person" means an
individual, sole proprietorship, partnership, corporation, limited liability
company, limited liability partnership, or other association of individuals,
however organized.

����
"Stablecoin" means a
digital asset designed to maintain a stable value by being:

����
(1)
�
Attached to a
traditional currency like the United States dollar or an exchange-traded
commodity; or

����
(2)
�
Backed by reserves
to reduce price volatility.

����
"Stored value" means a
monetary value that is evidenced by an electronic record.

����
"Tangible net worth" means
total assets, excluding intangible assets, less total liabilities, in
accordance with generally accepted accounting principles of the United States.

����
"Transfer" means to assume
control of a digital asset from or on behalf of another person and to:

����
(1)
�
Credit the digital
asset to the account of another person;

����
(2)
�
Move the digital
asset from one account to another account belonging to the same person; or

����
(3)
�
Relinquish control
of a digital asset to another person.

����
"United States dollar
equivalent of the digital asset" means the equivalent value of the digital
asset in United States dollars on a specific date or during a specified period,
as determined by a United States-based digital asset exchange.

����
�
��
-2
�
Exemptions.
�
This chapter shall not apply to:

����
(1)
�
The exchange, transfer,
or storage of a digital asset, or to digital asset administration, to the
extent regulated by the Securities Exchange Act of 1934, as amended (title 15
United States Code chapter 2B), or Commodity Exchange Act (title 7 United
States Code chapter 1);

����
(2)
�
Activity by a
person that only:

���������
(A)
�
Contributes
connectivity software or computing power to a:

��������������
(i)
�
Decentralized
digital asset; or

�������������
(ii)
�
Protocol governing
the transfer of the digital asset.

���������
(B)
�
Provides data
storage or security services for a business engaged in digital asset business activities
but does not otherwise engage in digital asset business activities on behalf of
another person; or

���������
(C)
�
Provides to a
person that is otherwise exempt from this chapter a digital asset as an enterprise
solution used solely between the two parties; provided that the person has no
agreement or relationship with the end user of the digital asset;

����
(3)
�
A person using a
digital asset, including creating, investing, buying, selling, or obtaining the
digital asset, as payment for the purchase or sale of goods or services solely for
academic purposes;

����
(4)
�
A person whose
annual digital asset business activity with, or on behalf of, other persons is
reasonably expected to be valued, in the aggregate, at $5,000 or less, measured
by the United States dollar equivalent of the digital asset;

����
(5)
�
An attorney who
provides escrow services to a person;

����
(6)
�
A securities
intermediary, as defined in section 490:8-102, or commodity intermediary, as
defined in section 490:9-102;

����
(7)
�
A digital asset
control-services vendor;

����
(8)
�
A person that:

���������
(A)
�
Does not receive
compensation from another person for:

��������������
(i)
�
Providing a
digital asset product or service; or

�������������
(ii)
�
Conducting digital
asset business activities; or

���������
(B)
�
Is engaged in
testing products or services with the person's own funds or digital assets;

����
(9)
�
Non-custodial digital
asset business activities by a person using a digital asset that has been:

���������
(A)
�
Acknowledged as
legal tender by the United States or a government recognized by the United
States; or

���������
(B)
�
Determined not to
be a security by a United States regulatory agency;

���
(10)
�
Banks, bank
holding companies, credit unions, savings banks, financial services loan
companies, or mutual banks organized under the laws of the United States or any
state; or

���
(11)
�
Any other person or class of persons that the
commissioner declares exempt from this chapter.

����
�
��
-3
�

Powers of commissioner.
�
In
addition to any other powers provided by law, the commissioner may:

����
(1)
�
Adopt rules
pursuant to chapter 91 as necessary for the administration of this chapter;

����
(2)
�
Issue declaratory
rulings or informal, nonbinding interpretations of this chapter;

����
(3)
�
Investigate and
conduct hearings regarding any violation of this chapter or any rule, order, or
agreement adopted under this chapter;

����
(4)
�
Create
fact-finding committees to make recommendations to the commissioner and to
support the commissioner's deliberations;

����
(5)
�
Require a charter
applicant or any of the applicant's control persons, executive officers,
directors, general partners, or managing members, to disclose any relevant
criminal history and request a criminal history record check to be conducted
pursuant to chapter 846; provided that the applicant shall pay all applicable
fees for each criminal history record check;

����
(6)
�
Contract with or
employ qualified persons who may be exempt from chapter 76, including
accountants, attorneys, investigators, examiners, auditors, or other
professionals, to assist the commissioner in exercising the commissioner's
powers and duties;

����
(7)
�
Process and
investigate complaints, subpoena witnesses and documents, administer oaths,
receive affidavits and oral testimony, conduct contested case proceedings under
chapter 91, and take other actions as necessary to exercise the commissioner's
powers and duties under this chapter;

����
(8)
�
Require each
digital asset company to comply, to the same extent and in the same manner as a
bank chartered by the State, with:

���������
(A)
�
Any rule,
guidance, guideline, statement, supervisory policy, or any similar proclamation
issued or adopted by the Federal Deposit Insurance Corporation; and

���������
(B)
�
Any policy of the
Conference of State Bank Supervisors;

����
(9)
�
Enter into
agreements or relationships with other government officials or regulatory
associations to improve efficiencies and reduce regulatory burden by sharing
resources; standardized or uniform methods or procedures; and documents,
records, information, or evidence obtained under this chapter;

���
(10)
�
Use, hire,
contract, or employ publicly or privately available analytical systems,
methods, or software to investigate or examine a digital asset company or other
person subject to this chapter;

���
(11)
�
Accept and rely on
investigation or examination reports made by other government officials in
Hawaii or another state;

���
(12)
�
Accept and cite in
examination reports, investigation reports, or any other writings of the
commissioner any
�
audit reports made by
an independent certified public accountant for the digital asset company or other
person subject to this chapter; provided that the audit and the commissioner's
examination or investigation relate to the same general subject matter; and

���
(13)
�
Enter into
agreements with, hire, retain, or contract with private and governmental
entities to develop educational programs relating to digital assets.

PART II.
�
CHARTERS

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�
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-4
�

Charter required.
�
(a)
�
No person shall engage in digital asset
business activities or hold itself out as able to engage in digital asset
business activities with or on behalf of another person unless the person is:

����
(1)
�
Chartered in the
state pursuant to this chapter; or

����
(2)
�
Exempted from the
charter requirement under section
���
-2.

����
(b)
�

Any transaction made in violation of this section shall be void, and no
person shall have the right to collect, receive, or retain any principal,
interest, fees, or other charges in connection with the void transaction.

����
�
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-5
�
Fees,
fines, and penalties; disposition.
�
(a)
�
The commissioner may adopt rules specifying
charter application and renewal fees; fines; penalties for violation of this
chapter or any rules adopted pursuant to this chapter; or any other charges
necessary to implement this chapter.

����
(b)
�
Unless otherwise specified, all fees, fines,
penalties, and other charges collected pursuant to this chapter shall be
deposited with the director of commerce and consumer affairs to the credit of
the compliance resolution fund established pursuant to section 26-9(o).
�
Payments shall be made through NMLS, to the
extent authorized by NMLS.

����
�
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-6
�

Charter application.
�
(a)
�
Applicants for a digital asset charter shall
apply in a form prescribed by the commissioner.
�

The application form shall include, at a minimum:

����
(1)
�
The legal name, any
trade names, and the business address of the applicant and, if the applicant is
a partnership, association, limited liability company, limited liability
partnership, or corporation, the names and business addresses of each controlling
member, officer, principal, or director;

����
(2)
�
The applicant's
principal place of business in the United States;

����
(3)
�
The address of any
branch offices at which the applicant proposes to engage in digital asset
business activities;

����
(4)
�
The identity and background information
required by subsection (b); and

����
(5)
�
Any other information
required by the commissioner.

����
(b)
�

For purposes of the charter application, the applicant shall provide to
the commissioner the following evidence to verify the applicant's identity and
background, including, if the applicant is not an individual, the identities
and backgrounds of each controlling member, officer, principal, or director:

����
(1)
�
Fingerprints for
submission to the Federal Bureau of Investigation or any other governmental
agency or entity authorized to receive the fingerprints to conduct a state,
national, and international criminal history background check; provided that the
applicant shall pay any applicable fees for the criminal history background
check; and

����
(2)
�
Legal and
financial histories, in a form prescribed by the commissioner, including authorization
for the commissioner to obtain:

���������
(A)
�
An independent
credit report from a consumer reporting agency, as described in section 603(p)
of the Fair Credit Reporting Act (title 15 United States Code section 1681a(p));
and

���������
(B)
�
Information
related to any relevant administrative, civil, or criminal findings by any
government agency;

provided that the commissioner may use any
information obtained pursuant to this section to determine an applicant's
financial responsibility, character, and general fitness for the charter.

����
(c)
�

The commissioner may use an agent to request information from, or
distribute information to, the United States Department of Justice or any other
private or governmental entity for purposes of this chapter.

����
(d)
�

An applicant for a charter pursuant to this chapter shall not be issued
the charter unless the applicant is registered with the business registration
division of the department to do business in the State.

����
(e)
�

The commissioner, by order or rules adopted pursuant to chapter 91, may waive
or modify any requirement of this chapter or establish new requirements to
facilitate the review of charter applications.

����
�
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-7
�

Issuance of charter; grounds for denial.
�

(a)
�
The commissioner shall review
each applicant, including, if the applicant is not an individual, each
controlling member, officer, principal, or director, to determine the
applicant's financial responsibility, character, and general fitness for a
charter.
�
The commissioner shall issue a
charter authorizing the applicant to engage in digital asset business
activities if the commissioner determines that the applicant or each
controlling member, officer, principal, or director:

����
(1)
�
Has not had a
digital asset license or charter revoked in any jurisdiction; provided that, if
a license or charter was revoked but the revocation was subsequently vacated,
it shall not be deemed a revocation for purposes of this chapter;

����
(2)
�
Has not been
convicted of, pled guilty or nolo contendere to, or been granted a deferred
acceptance of a guilty plea for a felony under federal law, the Uniform Code of
Military Justice, or the laws of any state or country:

���������
(A)
�
During the seven
years preceding the date of the application for a charter; or

���������
(B)
�
For a felony involving an
act of fraud, dishonesty, breach of trust, or money laundering,
at any
time preceding the date of the application;

����
(3)
�
Has demonstrated sufficient
financial responsibility, good character, and general fitness to command the
confidence of the community and to warrant a determination that the applicant
will operate honestly, fairly, and efficiently, pursuant to this chapter;
provided that, for purposes of this paragraph, the commissioner may find an
applicant not financially responsible based on:

���������
(A)
�
Outstanding
financial judgments, except judgments resulting solely from outstanding medical
expenses;

���������
(B)
�
Outstanding tax
liens or other government liens;

���������
(C)
�
Foreclosures in
the preceding three years; or

���������
(D)
�
A pattern of
seriously delinquent accounts in the preceding three years;

����
(4)
�
Has not been
convicted of, pled guilty or nolo contendere to, or been granted a deferred
acceptance of a guilty plea for a misdemeanor involving an act of fraud,
dishonesty, breach of trust, or money laundering under federal law, the Uniform
Code of Military Justice, or the laws of any state or country;

����
(5)
�
Has satisfied the
requirements of this chapter, except any requirements waived or modified by the
commissioner pursuant to section
�
���
-6(e); and

����
(6)
�
Has paid the bond
required by section
��
��
-10, if applicable.

����
(b)
�

The applicant, including each controlling member, officer, principal, or
director, shall authorize the commissioner to conduct background checks in each
state in which the person has conducted digital asset business activities to
verify the information provided pursuant to subsection (a).
�
The authorization shall include consent to
provide additional fingerprints, if needed, to law enforcement or regulatory
bodies in other states.

����
(c)
�

A charter shall not be issued to any applicant:

����
(1)
�
Whose charter or
license to conduct digital asset business activities was suspended or revoked
in the five years preceding the application by an authority in this State or
any other state or jurisdiction;

����
(2)
�
Who has advertised
to consumers or conducted transactions in the State in violation of this
chapter; or

����
(3)
�
Who has failed to submit
a completed application for charter.

����
(d)
�

A charter issued pursuant to this chapter shall remain in effect until
surrendered, suspended, or revoked, or until the charter expires for failure to
pay the annual charter renewal fee required by section
��
��
-10.

����
�
��
-8
�

Anti-money laundering program.
�
(a)
�
Each digital asset company shall conduct an
initial risk assessment that considers the legal, compliance, financial, and
reputational risks associated with the company's activities, services,
customers, counterparties, and geographic location.

����
(b)
�

Based on the initial risk assessment, each digital asset company shall
establish and maintain:

����
(1)
�
An anti-money
laundering program that complies with the Anti-Money Laundering Act of 2020;

����
(2)
�
An effective customer
due diligence system and monitoring program;

����
(3)
�
Procedures for
regularly screening customers against the Specially Designated Nationals and
Blocked Persons lists maintained by the Office of Foreign Assets Control and
any other government watchlists;

����
(4)
�
Recordkeeping
procedures for tracking any cash purchases or transactions and procedures for
reporting the cash purchases or transactions to the appropriate federal
regulatory agency, as required by the Anti‑Money Laundering Act of 2020;

����
(5)
�
Procedures for
monitoring and reporting any suspicious activities; and

����
(6)
�
Policies and procedures
for rejecting or blocking any transactions that violate state or federal law.

����
(c)
�

Each digital asset company shall conduct the risk assessment required by
subsection (a) annually, or more frequently to address a known risk, and shall
modify the company's programs and policies as needed to comply with subsection (b).

����
(d)
�

For purposes of this section, "customer due diligence" means
the process of verifying a customer's identity and assessing the risk
associated with the customer to prevent financial crimes like money laundering.

����
�
��
-9
�

Cybersecurity program.
�
(a)
�
Each digital asset company shall establish
and maintain a cybersecurity program to ensure the availability and
functionality of the digital asset company's electronic systems and to protect
the systems from unauthorized access, use, or tampering.
�
The cybersecurity program shall enable the
digital asset company to:

����
(1)
�
Identify internal
and external cybersecurity risks by, at a minimum, identifying the information
stored on the digital asset company's systems, the sensitivity of the
information, and how and by whom the information may be accessed;

����
(2)
�
Protect the
digital asset company's electronic systems and the information stored on the
systems from unauthorized access, use, or other malicious acts through the use
of defensive infrastructure and the implementation of policies and procedures;

����
(3)
�
Detect system
intrusions, data breaches, unauthorized access to systems or information,
malware, and other cybersecurity events;

����
(4)
�
Respond to
detected cybersecurity events to mitigate any negative effects; and

����
(5)
�
Recover from
cybersecurity events and restore normal operations and services.

����
(b)
�

Each digital asset company shall implement a written cybersecurity
policy setting forth the digital asset company's policies and procedures for
the protection of its electronic systems and any customer or counterparty data
stored on the company's systems.
�
The
written policy shall be reviewed and approved at least annually by the digital
asset company's board of directors or the equivalent governing body.
�
The written cybersecurity policy shall:

����
(1)
�
Establish policies,
procedures, and controls in compliance with subsection (a);

����
(2)
�
Designate a
cybersecurity officer;

����
(3)
�
Require the
development and implementation of employee training to educate employees on new
and emerging cybersecurity risks and threats, to the extent appropriate for
each employee's position and responsibilities;

����
(4)
�
Establish methods
for testing the digital asset company's cybersecurity systems; and

����
(5)
�
Establish
recordkeeping policies.

����
�
��
-10
�

Fees; bond.
�
(a)
�
A digital asset company shall pay the
following fees to the division through NMLS to obtain and maintain a valid
charter under this chapter:

����
(1)
�
An initial
nonrefundable application fee of $9,000;

����
(2)
�
An annual,
nonrefundable renewal application fee of $1,000; and

����
(3)
�
Any fees collected
by NMLS for the processing of the application, including any applicable fees for:

���������
(A)
�
A criminal history
background check of the applicant, including each of the applicant's control
persons, executive officers, directors, general partners, and managing members,
for submission to the Federal Bureau of Investigation or any governmental
agency or entity authorized to receive fingerprints for a state, national, and international
criminal history background check; and

���������
(B)
�
An independent
credit report obtained from a consumer reporting agency described in section 603(p)
of the Fair Credit Reporting Act (title 15 United States Code section 1681a(p)).

����
(b)
�

Each digital asset company shall also be assessed quarterly fees based
on the total value of the company's transactions in the State, measured by the
United States dollar equivalent of the digital assets, as recorded in the
company's quarterly reports.
�
The first quarterly
fees shall be assessed in the quarter after the applicant obtains a charter, in
accordance with the following:

����
(1)
�
For a digital
asset company where the total value of the company's transactions, measured by
the United States dollar equivalent of the digital assets, is not more than
$10,000, the quarterly assessment shall be $2,500;

����
(2)
�
For a digital asset company where the total value of the
company's transactions, measured by the United States dollar equivalent of the
digital assets, is more than $10,000 but not more than $15,000, the quarterly
assessment shall be $3,750
;

����
(3)
�
For a digital
asset company where the total value of the company's transactions, measured by
the United States dollar equivalent of the digital assets, is more than $15,000
but not more than $25,000, the quarterly assessment shall be $6,250;

����
(4)
�
For a digital
asset company where the total value of the company's transactions, measured by
the United States dollar equivalent of the digital assets, is more than $25,000
but not more than $35,000, the quarterly assessment shall be $8,750; and

����
(5)
�
For a digital
asset company where the total value of the company's transactions, measured by
the United States dollar equivalent of the digital assets, is more than $35,000,
the quarterly assessment shall be $12,500.

����
(c)
�

The assessments shall be paid quarterly on February 15, May 15, August
15, and November 15 of each year, based on the digital asset company's
quarterly reports as of the previous December 31, March 31, June 30, and
September 30, respectively.

����
(d)
�
Digital assets shall be based on the United
States dollar equivalent of the digital assets held on behalf of customers,
calculated from the company's quarterly report based on the trading price of
the asset on the digital asset company's platform as of 4:30 p.m. Hawaii-Aleutian
Standard Time.

����
(e)
�

If required by the commissioner, the applicant or digital asset company
shall file and maintain a surety bond that is approved by the commissioner and
executed by the applicant as obligor and by a surety company authorized to
operate as a surety in the State.
�
The
surety company's liability as a surety shall not exceed, in the aggregate, the
penal sum of the bond; provided that the penal sum of the bond shall be not
less than $500,000, based on the annual United States dollar equivalent of the digital
asset as reported in the charter application or annual renewal report.

����
(f)
�

The bond required by subsection (e) shall run to the State as obligee
for the use and benefit of the State and of any person or persons that may have
a cause of action against the digital asset company as obligor under this
chapter.
�
The bond shall be conditioned
upon the following:

����
(1)
�
The digital asset
company as obligor shall faithfully conform to and abide by this chapter and
all rules adopted under this chapter; and

����
(2)
�
The bond shall pay
to the State and any person or persons having a cause of action against the
digital asset company as obligor any moneys that may become due and owing to the
State or those persons under this chapter.

����
�
��
-11
�

Renewal of charter; annual report; quarterly reports.
�
(a)
�

Each digital asset company shall file an annual report in accordance
with NMLS policy.
�
The annual report
shall include the digital asset company's most recent audited annual financial
statement, including:

����
(1)
�
Balance sheets;

����
(2)
�
A statement of
income or loss;

����
(3)
�
A statement of
changes in shareholders' equity; and

����
(4)
�
A statement of
cash flows;

provided that, if the digital asset company is a
wholly owned subsidiary of another corporation, the digital asset company shall
submit the consolidated audited annual financial statement of the parent
company in lieu of the digital asset company's annual audited financial
statement.

����
(b)
�

Each digital asset company shall file quarterly reports, in a form
prescribed by the commissioner, that shall include:

����
(1)
�
An accounting of the
digital asset company's activities in the State since the prior reporting
period, including:

���������
(A)
�
The number of
stored value accounts opened;

���������
(B)
�
The number of
transactions processed;

���������
(C)
�
The total value of
transactions, measured by the United States dollar equivalent of the digital
assets;

���������
(D)
�
The number of
system outages;

���������
(E)
�
A chart of
accounts, including a description of each account; and

���������
(F)
�
Any other information
relating to performance metrics or the efficacy of the company, as required by
the commissioner;

����
(2)
�
A report of any
material changes to any of the information submitted by the digital asset
company in the company's original application that has not previously been
reported to the commissioner in any other report required under this chapter;

����
(3)
�
Disclosure of any
pending or final suspension, revocation, or other enforcement action by any
state or government authority; and

����
(4)
�
Any other
information required by the commissioner.

����
(c)
�

A digital asset company may renew its charter by:

����
(1)
�
Continuing to meet
the requirements of this chapter;

����
(2)
�
Filing a completed
renewal application in a form prescribed by NMLS or the commissioner; and

����
(3)
�
Paying a renewal
fee.

����
(d)
�

If, at the time the charter renewal is due, the digital asset company
has not filed an application deemed complete by the commissioner; filed an
annual report and all quarterly reports; or paid the quarterly fees, the
digital asset company's charter shall be suspended as of the date the renewal
is due, unless the company is granted an extension of time by the commissioner.
�
The digital asset company shall have thirty
days after the company's charter is suspended to file the missing documents or
to pay the outstanding fees, plus a late filing fee of $250 for each day after
suspension that the documents and fees are not made current.
�
The commissioner, for good cause, may reduce
or suspend the late filing fee.

����
�
��
-12
�

Principal place of business.
�
(a)
�
Each digital asset company shall maintain a
principal place of business in the United States, regardless of whether the
digital asset company maintains its principal office outside the United States.

����
(b)
�

The digital asset company's principal place of business shall be
identified in NMLS.

����
�
��

-13
�
Sale or transfer of charter;
change of control.
�
(a)
�
No charter granted to a digital asset company
shall be transferred, except as provided in this section.

����
(b)
�
A
person or group of persons proposing a change of control of a digital asset
company shall submit to the commissioner an application requesting approval of
the proposed change of control, accompanied by a nonrefundable application fee
of $10,000.

����
(c)
�

After reviewing the application submitted pursuant to subsection (b),
the commissioner may require the digital asset company or the person or group
of persons requesting a change of control, or both, to provide additional
information concerning the persons who propose to assume control of the digital
asset company.
�
The additional
information shall be limited to the types of information required of a digital
asset company as part of its original charter or renewal application.
�
The information shall include, for the
five-year period prior to the date of the application for change of control, a
history of any material litigation and any criminal convictions of each person
who, upon approval of the application for change of control, would be a principal
of the digital asset company.
�

Authorization shall be given to conduct criminal history record checks
of these persons, accompanied by payment of the applicable fee for each record
check.

����
(d)
�

The commissioner shall approve an application requesting a change of
control under subsections (b) and (c) if the commissioner determines that the
person or group of persons requesting approval has the competence, experience,
character, and general fitness to control the digital asset company in a lawful
and proper manner and that the interests of the public will not be jeopardized
by the change of control.

����
(e)
�
A
person who:

����
(1)
�
Acts as a proxy
for the sole purpose of voting at a designated meeting of the security holders
or holders of voting interests in a digital asset company or person in control
of a digital asset company;

����
(2)
�
Acquires control
of a digital asset company by devise or descent;

����
(3)
�
Acquires control
as a personal representative, custodian, guardian, conservator, trustee, or as
an officer appointed by a court of competent jurisdiction or by operation of
law; or

����
(4)
�
Is exempted by the
commissioner,

shall be exempt from the requirements of this
section; provided that the digital asset company shall notify the commissioner
when control is assumed by the person.

����
(f)
�

Before filing an application requesting the commissioner's approval of a
change of control, a person may request, in writing, a determination from the
commissioner as to whether the person would be considered a person in control
of a digital asset company upon consummation of a proposed transaction.
�
If the commissioner determines that the
person would not be a person in control of a digital asset company, the
commissioner shall enter an order to that effect, and the proposed person and
transaction shall not be subject to subsections (b) through (d).

����
(g)
�

Subsection (b) shall not apply to public offerings of securities.

����
�
��
-14
�

Ownership and control of a digital asset.
�
(a)
�

To the extent a digital asset company stores, holds, or maintains
custody or control of a digital asset on behalf of another person, the digital
asset company shall hold a digital asset of the same type and amount as that
which is owed or obligated to that person.

����
(b)
�

If a digital asset company violates subsection (a), the property
interest the person holds in the digital asset shall be a pro rata property
interest in the type of digital asset for which the person is entitled, without
regard to the time the person became entitled to the digital asset or the
digital asset company obtained control of the digital asset.

����
(c)
�

The digital asset referred to in this section shall:

����
(1)
�
Be held for the
person or persons entitled to the digital asset;

����
(2)
�
Not be considered
the property of the digital asset company; and

����
(3)
�
Not be subject to
the claims of creditors of the digital asset company.

����
(d)
�

No digital asset company shall sell, transfer, assign, lend, hypothecate,
pledge, or otherwise use or encumber assets, including digital assets, stored,
held, or maintained by, or under the custody or control of, the digital asset
company on behalf of another person, except at the direction of that person,
unless it is clearly explained to the person that the use or encumberment is the
intent of the product.

PART III.
�
DISCLOSURES, ADVERTISING, AND RECORDKEEPING

����
�
��

-15
�
Required disclosures.
�
(a)
�

A digital asset company that engages in digital asset business activities
shall provide to each person using the digital asset company's products or
services the disclosures required by subsection (b) and any additional
disclosures the commissioner deems necessary for the protection of the
company's clients.
�
The commissioner
shall determine the required time for and form of the disclosure.
�
Any disclosure required by this section shall
be made in writing, unless an alternate disclosure method is approved by the
commissioner, and shall be issued separately from any other information
provided by the digital asset company.

����
(b)
�

Before doing business with a person, a digital asset company shall
disclose to the person, to the extent applicable to the person's intended
business activities:

����
(1)
�
The amount and
timing of any fees and charges the digital asset company may assess, or how the
fees and charges will be calculated if the fees or charges are not established
in advance;

����
(2)
�
Whether the
product or service provided by the digital asset company is covered by:

���������
(A)
�
A form of
insurance or is otherwise guaranteed against loss by an agency of the United
States, including the Federal Deposit Insurance Corporation or Securities
Investor Protection Corporation; or

���������
(B)
�
Private insurance
against theft or loss, including cyber theft or theft by other means;

����
(3)
�
The irrevocability
of a transfer or exchange;

����
(4)
�
The method by
which the person can update the person's contact information with the digital
asset company;

����
(5)
�
That the date or
time that the person initiates instructions to make a transfer or exchange may
differ from the date or time when the transfer or exchange is actually completed
and the person's account is debited;

����
(6)
�
The person's right
to at least thirty days' notice if the digital asset company changes its fee
schedule, terms and conditions of its business activities with the person, or
other policies applicable to the person's account; and

����
(7)
�
That digital assets
are not money.

����
(c)
�

At the end of a digital asset transaction with or on behalf of a person,
a digital asset company shall provide to the person, in writing:

����
(1)
�
The name and
contact information of the digital asset company, and any information the
person may need to ask a question or file a complaint;

����
(2)
�
The type, value,
date, precise time, and amount of the transaction; and

����
(3)
�
Any fees charged
for the transaction, including any charge for converting a digital asset to
money, bank credit, or another digital asset.

����
�
��
-16
�

Tangible net worth requirement; records.
�

(a)
�
A digital asset company engaged
in digital asset business activities shall maintain at all times a tangible net
worth of at least $500,000, or an amount determined by the commissioner to be
necessary to ensure the company's sound operations.

����
(b)
�

Each digital asset company shall create, preserve, and make available
for inspection by the commissioner the books, accounts, and other records
required by subsection (c) in a form that enables the commissioner to determine
whether the digital asset company is in compliance with this chapter, any relevant
court order, and other laws of the State.

����
(c)
�

For each digital asset business activity conducted with or on behalf of
a person, the digital asset company shall maintain for five years after the
date of the activity a record of:

����
(1)
�
Each transaction,
including the:

���������
(A)
�
Identity and
address of the person and, to the extent feasible, the identity and address of
any other parties to the transaction;

���������
(B)
�
Account number of
the person;

���������
(C)
�
Form, amount, and
date of the transaction; and

���������
(D)
�
Any payment
instructions given by the person;

����
(2)
�
The aggregate
number of transactions and aggregate value of transactions with or on behalf of
the person in the previous twelve calendar months, expressed in the United
States dollar equivalent of the digital assets;

����
(3)
�
Each transaction with
or on behalf of the person in which the digital asset company exchanged one
form of digital asset for money or another form of digital asset;

����
(4)
�
A general ledger, posted
to at least monthly, that lists all of the digital asset company's assets,
liabilities, capital, income, ownership equity, and expenses;

����
(5)
�
Each call report related
to the person that the digital asset company is required by law to create or
provide to the division or NMLS;

����
(6)
�
The account number
and address of each bank the digital asset company used in conducting its
digital asset business activity with the person and the bank statements and
bank reconciliation records for those accounts;

����
(7)
�
If the person
filed a customer complaint, any communications and documentation related to the
investigation of the complaint; and

����
(8)
�
A report of any
digital asset business activity transaction with or on behalf of the person
that the digital asset company was unable to complete.

����
�
��
-17
�

Advertising and marketing.
�

(a)
�
No digital asset company
engaged in digital asset business activities shall advertise its products,
services, or activities in the State, or advertise to consumers in the State, unless
the advertisement includes the name of the company and confirmation that the
digital asset company is "Chartered by the State of Hawaii Department of
Commerce and Consumer Affairs' Division of Financial Institutions to engage in
digital asset business activity."

����
(b)
�

Each digital asset company shall maintain for at least five years from
the date of the materials' creation, and make available for examination by the
commissioner, all advertising and marketing materials, including advertising or
marketing through:

����
(1)
�
Print media,
including brochures;

����
(2)
�
Digital media and
internet websites;

����
(3)
�
Television and video
streaming services;

����
(4)
�
Radio and audio
streaming services; and

����
(5)
�
Presentation
materials;

provided that if material changes are made to
internet or digital advertising or marketing materials, the digital asset
company shall maintain screenshots or transcripts reflecting the changes.

����
(c)
�

In all advertising and marketing materials, the digital asset company and
any person or entity acting on the company's behalf shall:

����
(1)
�
Comply with all
disclosure requirements under state and federal law; and

����
(2)
�
Avoid making,
directly or by implication, any false, misleading, or deceptive representations
or omissions.

����
�
��
-18
�

Confidentiality.
�
(a)
�
Except as provided in title 12 United
States Code section 5111, the following shall continue to apply to information and
materials after the information or material has been disclosed to NMLS or any
federal or state regulatory officials having authority over transactions under
this chapter:

����
(1)
�
Any federal or
state law regarding the privacy or confidentiality of information or materials
provided to NMLS; and

����
(2)
�
Any privilege
arising under federal or state law or the rules of any federal or state court.

����
(b)
�

For purposes of this section, the commissioner may enter into agreements
or sharing arrangements with other governmental agencies, the Conference of
State Bank Supervisors, or other associations representing governmental
agencies.

����
(c)
�

Information or material that is subject to a privilege or
confidentiality under subsection (a) shall not be subject to:

����
(1)
�
Disclosure under
chapter 92F; or

����
(2)
�
Subpoena,
discovery, or admission into evidence in any private civil action or
administrative proceeding, unless:

���������
(A)
�
The privilege is
determined by NMLS to be inapplicable to the information or material; or

���������
(B)
�
The person to whom
the information or material pertains waives the privilege.

����
(d)
�

Notwithstanding chapter 92F, investigations and examinations authorized
under section
�
��
�
-20 and
any related information and documents, including reports of the investigation
or examination, shall be confidential and shall not be subject to discovery or
disclosure in any civil lawsuit or criminal proceeding.

����
(e)
�

If a conflict exists between this section and any other provision of state
law relating to the disclosure of privileged or confidential information or
material, this section shall control.

����
(f)
�

This section shall not apply to information or material relating to the
employment history of, or any publicly adjudicated disciplinary or enforcement
actions against, any persons whose information is publicly accessible in NMLS.

PART
IV.
�
ENFORCEMENT

����
�
��
-19
�

Enforcement authority; violations; penalties.
�
(a)
�

The commissioner may take any disciplinary action specified in
subsection (b) against an applicant or digital asset company if the applicant;
digital asset company; or any control person, executive officer, director,
general partner, or managing member of the applicant or digital asset company has:

����
(1)
�
Violated this
chapter or any rule adopted or order issued pursuant to this chapter;

����
(2)
�
Failed to disclose
facts or conditions that, had those facts or conditions been known at the time
the application for charter was made, would have justified the commissioner in
denying the application;

����
(3)
�
Failed to provide
within a reasonable time any information required by the commissioner;

����
(4)
�
Failed to provide
or maintain proof of financial responsibility;

����
(5)
�
Become insolvent;

����
(6)
�
Made in any
document or statement filed with the commissioner a false representation of a
material fact or omitted a material fact;

����
(7)
�
Been convicted of
or entered a plea of guilty or nolo contendre to a crime involving fraud,
deceit, or any similar crime;

����
(8)
�
Failed to make,
maintain, or produce records in compliance with this chapter or any rule
adopted by the commissioner pursuant to chapter 91;

����
(9)
�
Been the subject
of any disciplinary action from a state or federal agency that resulted in the
revocation of a license or charter;

���
(10)
�
Had a final
judgement entered against the applicant or digital asset company for a
violation of:

���������
(A)
�
This chapter;

���������
(B)
�
Any state or
federal law concerning a digital asset license or charter or money transmitter
license; or

���������
(C)
�
Any state or
federal law prohibiting unfair or deceptive acts or practices; or

���
(11)
�
Failed to take, or
provide proof of taking, timely corrective action as required by the
commissioner after an investigation or examination pursuant to section
��
��
-20.

����
(b)
�

If the commissioner finds that an applicant or a digital asset company
has committed one or more violations under subsection (a), the commissioner
may:

����
(1)
�
Deny an
application for a charter or branch office;

����
(2)
�
Suspend or revoke
the charter in accordance with section
���
�
-23;

����
(3)
�
Order the digital
asset company to cease and desist from engaging in any act specified in
subsection (a), in accordance with section
��
��
-24;

����
(4)
�
Order the digital
asset company to refund to customers any excess charges under this chapter; or

����
(5)
�
Impose penalties
of up to $20,000 for each violation, in accordance with section
��
��
-26.

����
(c)
�

The commissioner may issue a temporary cease and desist order if the
commissioner finds that the digital asset company, applicant, or other person
subject to this chapter is engaging, has engaged, or is about to engage in an
illegal, unauthorized, unsafe, or unsound practice in violation of this
chapter.

����
(d)
�
If the commissioner denies or revokes a
charter or takes other disciplinary action pursuant to this chapter, the
commissioner shall enter an order to that effect and notify the applicant or digital
asset company of the denial, revocation, or other disciplinary action by
personal service or certified mail to the last known address of the applicant
or digital asset company as shown on the application or charter, or as
furnished in writing to the commissioner.

����
(e)
�

No revocation, suspension, consent order, or surrender of a charter
shall impair or affect the obligations of any preexisting lawful contract
between a digital asset company and a consumer.

����
(f)
�

The commissioner may reinstate a charter, terminate a suspension, or
grant a charter to a digital asset company or person whose charter has been
revoked, suspended, or denied if no fact or condition then exists that would
clearly justify the revocation, suspension, or denial.

����
(g)
�

The commissioner may impose on a digital asset company, applicant, or other
person subject to this chapter an administrative fine if the commissioner
finds, on the record after notice and an opportunity for a hearing, that the
digital asset company, applicant, or person has violated or failed to comply
with any requirement of this chapter or any rule adopted or order issued under
this chapter.

����
(h)
�

Each violation or failure to comply with any directive or order of the
commissioner shall be a separate violation.

����
�
��
-20
�

Investigation and examination; authority.
�
(a)
�

In addition to the powers granted to the commissioner under section
���
-3, the commissioner may conduct
investigations and examinations in accordance with this section and, for
purposes of an investigation or examination, may:

����
(1)
�
Access, receive,
and use any books, accounts, records, files, documents, or information that the
commissioner deems relevant to the investigation or examination, regardless of
the location, possession, control, or custody of the documents, information, or
evidence;

����
(2)
�
Review,
investigate, or examine any digital asset company or person subject to this
chapter as often as necessary to carry out the purposes of this chapter;

����
(3)
�
Direct, subpoena,
or order the attendance of, and examine under oath, any person whose testimony
may be required regarding a digital asset transaction, digital asset business
activity, or any other subject matter of the investigation or examination; and

����
(4)
�
Direct, subpoena,
or order a person to produce books, accounts, records, files, and any other
documents the commissioner deems relevant.

����
(b)
�

Each digital asset company or other person subject to this chapter shall
provide to the commissioner, upon the commissioner's request, any books or
records relating to the company or person's digital asset business
activities.
�
The commissioner shall also
be permitted to interview the control persons, executive officers, directors,
general partners, managing members, principals, managers, employees,
independent contractors, agents, and consumers who may have information about
the digital asset company or its digital asset business activities.

����
(c)
�

If directed by the commissioner, each digital asset company or person
subject to this chapter shall make or compile reports or prepare other
information to support the commissioner's investigation or examination,
including:

����
(1)
�
Accounting
compilations;

����
(2)
�
Information,
lists, or data, concerning digital asset transactions in a format prescribed by
the commissioner; or

����
(3)
�
Any other
information the commissioner deems necessary.

����
(d)
�

In conducting any investigation or examination authorized by this
chapter, the commissioner may control access to any documents or records of the
digital asset company or person under investigation or examination.
�
The commissioner may take possession of the
documents or records or place a person in exclusive charge of the documents or
records.
�
During the period of control,
no person shall remove or attempt to remove any of the documents or records
except pursuant to a court order or with the consent of the commissioner;
provided that, unless the commissioner has reasonable grounds to believe the
records or documents have been, or are at risk of being, altered or destroyed,
the commissioner shall give consent for the digital asset company or owner of
the documents or records to access the documents or records as necessary to
conduct the company or person's ordinary business affairs.

����
(e)
�

This section shall apply even if a digital asset company or person
subject to this chapter acts or claims to act without the State's authority.

����
(f)
�

No digital asset company or person subject to investigation or
examination under this section may knowingly withhold, abstract, remove,
mutilate, destroy, or conceal any relevant books, records, computer records, or
other information.

����
(g)
�

For each digital asset company or person investigated or examined under
this section, the commissioner may charge an investigation or examination fee,
payable to the commissioner, based upon the cost per hour, per examiner, for
the investigation or examination.
�
The
hourly fee shall be $60 or amount established by the commissioner by rule
pursuant to chapter 91.
�
In addition to
the investigation or examination fee, the commissioner may charge any digital
asset company or person who is investigated or examined pursuant to this
section additional fees, payable to the commissioner, for travel, per diem,
mileage, or other reasonable expenses incurred in connection with the
investigation or examination.

����
(h)
�

Any person having reason to believe that this chapter, or any rules
adopted or orders issued under this chapter, have been violated, or that a
charter issued under this chapter should be suspended or revoked, may file a
written complaint with the commissioner, setting forth the details of the
alleged violation or grounds for suspension or revocation.

����
�
��
-21
�

Prohibited practices.
�
(a)
�
Except as otherwise provided by law, no
digital asset company, including the company's control persons, executive
officers, directors, general partners, managing members, employees, or independent
contractors, or any other person subject to this chapter shall, directly or
indirectly:

����
(1)
�
Engage in any act
that attempts to limit or restrict the application of this chapter;

����
(2)
�
Use a customer's
digital asset account number to prepare, issue, or create a transaction on
behalf of the customer without the customer's authorization;

����
(3)
�
Charge, collect,
or receive any fees for negotiating a digital asset transaction, other than
fees authorized by this chapter, rules adopted pursuant to this chapter, or any
other applicable state or federal law;

����
(4)
�
Fail to make any
disclosures required by this chapter, rules adopted pursuant to this chapter,
or any other applicable state or federal law;

����
(5)
�
Employ any scheme,
device, or artifice to defraud or mislead any consumer or person;

����
(6)
�
Engage in any
unfair or deceptive acts, practices, or advertising in connection with a
digital asset business activity;

����
(7)
�
Obtain a digital
asset by fraud or misrepresentation;

����
(8)
�
Conduct any
digital asset business activity with or on behalf of any person physically
located in the State through the use of the Internet, facsimile, telephone,
kiosk, or any other means, without first obtaining a charter under this
chapter;

����
(9)
�
Make a false or
deceptive statement or representation to consumers, including statements
regarding rates, fees, financing terms, or any other conditions placed on
digital asset business activities;

���
(10)
�
Make a false
statement or knowingly omit a material fact in connection with any reports
filed with the division or investigation or examination conducted by the
division;

���
(11)
�
Conduct digital
asset business activities from any location not authorized by the commissioner as
a principal place of business or branch office;

���
(12)
�
Draft funds from
any depository financial institution without the written approval of the
consumer; provided that nothing in this paragraph shall prohibit the conversion
of a negotiable instrument into an electronic form for processing through the
Automated Clearing House or a similar system;

���
(13)
�
Fail to comply
with all applicable state and federal laws controlling the activities governed
by this chapter; or

���
(14)
�
Fail to pay any
fee, assessment, or moneys due to the department.

����
(b)
�

In addition to any other penalty provided for under this chapter, any
digital asset transaction conducted in violation of subsection (a) shall be
void and unenforceable.

����
�
��
-22
�

Voluntary surrender of a charter.
�

(a)
�
A digital asset company
may voluntarily cease business and surrender the company's charter by giving
written notice of the intended surrender to the commissioner through NMLS.

����
(b)
�

Notice to the commissioner shall be provided at least thirty days prior
to the surrender of the charter and shall include:

����
(1)
�
The date of the
surrender;

����
(2)
�
The name, address,
telephone number, facsimile number, and electronic mail address of a person
within the company having sufficient knowledge and authority to communicate
with the commissioner regarding all matters relating to the digital asset
company;

����
(3)
�
The reason for the
surrender;

����
(4)
�
Information
relating to the digital asset company's outstanding digital asset transactions
in the State, including the:

���������
(A)
�
Total dollar
amount of the digital asset company's outstanding digital asset transactions;

���������
(B)
�
Dollar amount of each
outstanding digital asset transaction; and

���������
(C)
�
Name, address, and
telephone number of each person with whom the digital asset company has an
outstanding digital asset transaction.

����
(5)
�
A list of the
digital asset company's authorized branch offices, if any;

����
(6)
�
Confirmation that
the digital asset company has notified each of its authorized branch offices,
if any, that the branch offices shall no longer conduct digital asset business activities
on the company's behalf; and

����
(7)
�
Confirmation that
the digital asset company has notified each of its digital asset accounts, if
any, that the digital asset account is being transferred and has provided
contact information for the digital asset company or entity to which the
digital asset is being assigned.

����
�
��

-23
�
Suspension or revocation of a
charter.
�
The commissioner may
suspend or revoke a charter if the commissioner finds that:

����
(1)
�
A fact or
condition exists that, had it existed when the digital asset company applied
for the charter, would have been grounds for denying the digital asset
company's application;

����
(2)
�
The digital asset
company's tangible net worth has become insufficient and the company, after ten
days' written notice from the commissioner, failed to take the steps required
by the commissioner to remedy the insufficiency;

����
(3)
�
The digital asset
company has knowingly violated any material provision of this chapter or any
rule adopted or order issued under this chapter;

����
(4)
�
The digital asset
company is conducting, or has conducted, its business in an unsafe or unsound
manner;

����
(5)
�
The digital asset
company has become insolvent;

����
(6)
�
The digital asset
company has suspended payment of its obligations, made an assignment for the
benefit of its creditors, or admitted in writing its inability to pay its debts
as they become due;

����
(7)
�
The digital asset
company has filed for bankruptcy, reorganization, arrangement, or any other
relief under federal bankruptcy laws;

����
(8)
�
The digital asset
company refuses to permit the commissioner to undertake an investigation or
examination that is authorized by this chapter; or

����
(9)
�
The competence,
experience, character, or general fitness of the digital asset company
indicates that it is no longer in the public interest to allow the company to
hold a charter.

����
�
��
-24
�

Orders to cease and desist.
�
(a)
�
The commissioner may issue an order requiring
a digital asset company to cease and desist if the commissioner determines that
the digital asset company's violation of this chapter, or a rule adopted or
order issued under this chapter, is likely to cause:

����
(1)
�
Immediate and
irreparable harm to the digital asset company, the digital asset company's
customers, or the public; or

����
(2)
�
The insolvency or
a significant dissipation of the assets of the digital asset company.

����
(b)
�

An order to cease and desist shall be effective upon the service of the
order and shall remain in effect pending the completion of an administrative
proceeding pursuant to chapter 91; provided that the digital asset company
may petition the circuit court for a judicial order setting aside, limiting, or
suspending the order pending the completion of the administrative proceeding.

����
(c)
�

The commissioner shall hold an administrative proceeding no later than
twenty calendar days after issuing an order to cease and desist.

����
(d)
�

The commissioner may also apply to the circuit court for a temporary
restraining order or other injunctive relief, as necessary, to protect the
public interest.

����
�
��

-25
�
Consent orders.
�
The commissioner may enter into a consent
order with a person at any time to resolve a matter arising under this
chapter.
�
The consent order shall be
signed by the person to whom the order is issued, or the person's authorized
representative, and shall indicate the person's agreement with the terms of the
order.
�
A consent order may provide that
the order does not constitute an admission by the person that this chapter, or
a rule adopted or order issued under this chapter, has been violated.

����
�
��

-26
�
Civil penalties.
�
(a)
�

The commissioner may assess a fine against a person who violates this
chapter, or a rule adopted or order issued under this chapter, in an amount not
to exceed $10,000 per violation, plus the State's costs and expenses for
investigating and litigating the matter, including reasonable attorney's fees.

����
(b)
�

Any violation of this chapter that is directed toward, targets, or
injures an elder may be subject to an additional civil penalty of not more than
$10,000 per violation, in addition to any other fines or penalties assessed for
the violation.

����
�
��

-27
�
Criminal penalties.
�
(a)
�

A person who intentionally makes a false statement, misrepresentation,
or false certification in a record filed or required to be maintained under
this chapter, including a person who makes a false entry or omits a material
entry in a record, shall be guilty of a class C felony and shall be subject to
a fine of not more than $10,000.

����
(b)
�

A person who knowingly engages in any activity for which a charter is
required under this chapter without holding a charter shall be guilty of a
misdemeanor and shall be subject to a fine of not more than $1,000,
imprisonment for not more than one year, or both; provided that each day a
violation of this chapter exists shall be a separate offense.

����
�
��

-28
�
Unchartered persons.
�
(a)
�

If the commissioner has reason to believe that a person is conducting
digital asset business activities without a charter, in violation of section
���
-4, the commissioner may:

����
(1)
�
Issue an order for
the person to show cause why the commissioner should not issue an order to
cease and desist;

����
(2)
�
Issue an order to
cease and desist pursuant to section
��
�
-24; provided that an order to cease and
desist shall be effective upon service of the order; and provided further that
a person who is served with an order to cease a desist for an alleged violation
of section
�
��
�
-4 may
petition the circuit court for a judicial order setting aside, limiting, or
suspending the order pending the completion of an administrative proceeding
pursuant to section
��
��
-29; or

����
(3)
�
If the public
would be irreparably harmed by the person's continued unchartered digital asset
business activities, petition the circuit court in the appropriate jurisdiction
for the issuance of a temporary restraining order.

����
(b)
�

The commissioner shall hold an administrative proceeding no later than
twenty calendar days after issuing an order to cease and desist.

����
�
��
-29
�

Administrative procedures.
�
All
administrative proceedings under this chapter shall be conducted in accordance
with chapter 91.

����
�
��

-30
�
Hearings.
�
Except as otherwise provided in this
chapter, the commissioner shall not suspend or revoke a charter, issue an order
to cease and desist, or assess a civil penalty without providing the digital
asset company, applicant, or other person subject to this chapter with notice
and an opportunity to be heard.

����
�
��
-31
�

Division functions.
�
(a)
�
The division shall exercise all
administrative functions of the State in regulating, supervising, and issuing
charters to digital asset companies.

����
(b)
�

The division may adopt rules pursuant to chapter 91 as necessary to
effectuate the purposes of this chapter."

����
SECTION
3
.
�
Section 489D-4,
Hawaii Revised Statutes, is amended by amending the definition of
"monetary value" to read as follows:

����
""Monetary value"
means a medium of exchange, whether or not redeemable in money[
.
]
,except
value defined as a digital asset under chapter
����
.
"

����
SECTION
4
.
�
Section
846-2.7, Hawaii Revised Statutes, is amended by amending subsection (b) to read
as follows:

����
"
(b)
�
Criminal history record checks may be
conducted by:

����
(1)
�
The department of health or its
designee on operators of adult foster homes for individuals with developmental
disabilities or developmental disabilities domiciliary homes and their
employees, as provided by section 321-15.2;

����
(2)
�
The department of health or its
designee on prospective employees, persons seeking to serve as providers, or
subcontractors in positions that place them in direct contact with clients when
providing non-witnessed direct mental health or health care services as
provided by section 321-171.5;

����
(3)
�
The department of health or its
designee on all applicants for licensure or certification for, operators for,
prospective employees, adult volunteers, and all adults, except adults in care,
at healthcare facilities as defined in section 321-15.2;

����
(4)
�
The department of education on
employees, prospective employees, and teacher trainees in any public school in
positions that necessitate close proximity to children as provided by section
302A-601.5;

����
(5)
�
The counties on employees and
prospective employees who may be in positions that place them in close
proximity to children in recreation or child care programs and services;

����
(6)
�
The county liquor commissions on
applicants for liquor licenses as provided by section 281-53.5;

����
(7)
�
The county liquor commissions on
employees and prospective employees involved in liquor administration, law
enforcement, and liquor control investigations;

����
(8)
�
The department of human services on
operators and employees of child caring institutions, child placing
organizations, and resource family homes as provided by section 346-17;

����
(9)
�
The department of human services on
prospective adoptive parents as established under section 346‑19.7;

���
(10)
�
The department of human services or its
designee on applicants to operate child care facilities, household members of
the applicant, prospective employees of the applicant, and new employees and
household members of the provider after registration or licensure as provided
by section 346-154, and persons subject to section 346-152.5;

���
(11)
�
The department of human services on
persons exempt pursuant to section 346-152 to be eligible to provide child care
and receive child care subsidies as provided by section 346-152.5;

���
(12)
�
The department of health on operators
and employees of home and community-based case management agencies and
operators and other adults, except for adults in care, residing in community
care foster family homes as provided by section 321-15.2;

���
(13)
�
The department of human services on
staff members of the Hawaii youth correctional facility as provided by section
352-5.5;

���
(14)
�
The department of human services on
employees, prospective employees, and volunteers of contracted providers and
subcontractors in positions that place them in close proximity to youth when
providing services on behalf of the office or the Hawaii youth correctional
facility as provided by section 352D-4.3;

���
(15)
�
The judiciary on employees and
applicants at detention and shelter facilities as provided by section 571-34;

���
(16)
�
The department of corrections and
rehabilitation on employees and prospective employees, volunteers, contract
service providers, and subcontract service providers who are directly involved
with the treatment and care of, or directly involved in providing correctional
programs and services to, persons committed to a correctional facility, or
placed in close proximity to persons committed when providing services on
behalf of the department or the correctional facility, as provided by section
353-1.5 and the department of law enforcement on employees and prospective employees
whose duties involve or may involve the exercise of police powers including the
power of arrest as provided by section 353C-5;

���
(17)
�
The board of private detectives and
guards on applicants for private detective or private guard licensure as
provided by section 463-9;

���
(18)
�
Private schools and designated
organizations on employees and prospective employees who may be in positions
that necessitate close proximity to children; provided that private schools and
designated organizations receive only indications of the states from which the
national criminal history record information was provided pursuant to section
302C-1;

���
(19)
�
The public library system on employees
and prospective employees whose positions place them in close proximity to
children as provided by section 302A
‑
601.5;

���
(20)
�
The State or any of its branches,
political subdivisions, or agencies on applicants and employees holding a
position that has the same type of contact with children, vulnerable adults, or
persons committed to a correctional facility as other public employees who hold
positions that are authorized by law to require criminal history record checks
as a condition of employment as provided by section 78-2.7;

���
(21)
�
The department of health on licensed
adult day care center operators, employees, new employees, subcontracted
service providers and their employees, and adult volunteers as provided by
section 321-15.2;

���
(22)
�
The department of human services on
purchase of service contracted and subcontracted service providers and their
employees and volunteers, as provided by sections 346-2.5 and 346-97;

���
(23)
�
The department of human services on
foster grandparent program, senior companion program, and respite companion
program participants as provided by section 346-97;

���
(24)
�
The department of human services on
contracted and subcontracted service providers and their current and
prospective employees that provide home and community‑based services
under section 1915(c) of the Social Security Act, title 42 United States Code
section 1396n(c), or under any other applicable section or sections of the
Social Security Act for the purposes of providing home and community-based
services, as provided by section 346-97;

���
(25)
�
The department of commerce and consumer
affairs on proposed directors and executive officers of a bank, savings bank,
savings and loan association, trust company, and depository financial services
loan company as provided by section 412:3-201;

���
(26)
�
The department of commerce and consumer
affairs on proposed directors and executive officers of a nondepository
financial services loan company as provided by section 412:3-301;

���
(27)
�
The department of commerce and consumer
affairs on the original chartering applicants and proposed executive officers
of a credit union as provided by section 412:10-103;

���
(28)
�
The department of commerce and consumer
affairs on:

���������
(A)
�
Each principal of every non-corporate
applicant for a money transmitter license;

���������
(B)
�
Each person who upon approval of an
application by a corporate applicant for a money transmitter license will be a
principal of the licensee; and

���������
(C)
�
Each person who upon approval of an
application requesting approval of a proposed change in control of licensee
will be a principal of the licensee,

���������
as
provided by sections 489D-9 and 489D-15;

���
(29)
�
The department of commerce and consumer
affairs on applicants for licensure and persons licensed under title 24;

���
(30)
�
The Hawaii health systems corporation
on:

���������
(A)
�
Employees;

���������
(B)
�
Applicants seeking employment;

���������
(C)
�
Current or prospective members of the
corporation board or regional system board; or

���������
(D)
�
Current or prospective volunteers,
providers, or contractors,

���������
in
any of the corporation's health facilities as provided by section 323F-5.5;

���
(31)
�
The department of commerce and consumer
affairs on:

���������
(A)
�
An applicant for a mortgage loan
originator license, or license renewal; and

���������
(B)
�
Each control person, executive officer,
director, general partner, and managing member of an applicant for a mortgage
loan originator company license or license renewal,

���������
as
provided by chapter 454F;

���
(32)
�
The state public charter school
commission or public charter schools on employees, teacher trainees,
prospective employees, and prospective teacher trainees in any public charter
school for any position that places them in close proximity to children, as
provided in section 302D-33;

���
(33)
�
The counties on prospective employees
who work with children, vulnerable adults, or senior citizens in
community-based programs;

���
(34)
�
The counties on prospective employees
for fire department positions that involve contact with children or vulnerable
adults;

���
(35)
�
The counties on prospective employees
for emergency medical services positions that involve contact with children or
vulnerable adults;

���
(36)
�
The counties on prospective employees
for emergency management positions and community volunteers whose
responsibilities involve planning and executing homeland security measures
including viewing, handling, and engaging in law enforcement or classified meetings
and assisting vulnerable citizens during emergencies or crises;

���
(37)
�
The State and counties on employees,
prospective employees, volunteers, and contractors whose position
responsibilities require unescorted access to secured areas and equipment
related to a traffic management center;

���
(38)
�
The State and counties on employees and
prospective employees whose positions involve the handling or use of firearms
for other than law enforcement purposes;

���
(39)
�
The State and counties on current and
prospective systems analysts and others involved in an agency's information
technology operation whose position responsibilities provide them with access
to proprietary, confidential, or sensitive information;

���
(40)
�
The department of commerce and consumer
affairs on:

���������
(A)
�
Applicants for real estate appraiser
licensure or certification as provided by chapter 466K;

���������
(B)
�
Each person who owns more than ten per
cent of an appraisal management company who is applying for registration as an
appraisal management company, as provided by section 466M-7; and

���������
(C)
�
Each of the controlling persons of an
applicant for registration as an appraisal management company, as provided by
section 466M-7;

���
(41)
�
The department of health or its
designee on
:

���������
(A)
�
Individual applicants or individuals
acting on behalf of applying entities for hemp processor permits as provided
under section 328G-2; and

���������
(B)
�
All
license
applicants, licensees, employees, contractors, and prospective employees of
medical cannabis dispensaries, and individuals permitted to enter and remain in
medical cannabis dispensary facilities as provided under sections 329D-15(a)(4)
and 329D-16(a)(3);

���
(42)
�
The department of commerce and consumer
affairs on applicants for nurse licensure or license renewal, reactivation, or
restoration as provided by sections 457-7, 457-8, 457-8.5, and 457-9;

���
(43)
�
The
county police departments on applicants for permits to acquire firearms
pursuant to section 134-2, on individuals registering their firearms pursuant
to section 134-3, and on applicants for new or renewed licenses to carry a
pistol or revolver and ammunition pursuant to section 134-9;

���
(44)
�
The department of commerce and consumer
affairs on:

���������
(A)
�
Each of the controlling persons of the
applicant for licensure as an escrow depository, and each of the officers,
directors, and principals who will be in charge of the escrow depository's
activities upon licensure; and

���������
(B)
�
Each of the controlling persons of an
applicant for proposed change in control of an escrow depository licensee, and
each of the officers, directors, and principals who will be in charge of the
licensee's activities upon approval of the application,

���������
as
provided by chapter 449;

���
(45)
�
The department of taxation on current
or prospective employees or contractors who have access to federal tax
information in order to comply with requirements of federal law, regulation, or
procedure, as provided by section 231-1.6;

���
(46)
�
The department of labor and industrial
relations on current or prospective employees or contractors who have access to
federal tax information in order to comply with requirements of federal law,
regulation, or procedure, as provided by section 383-110;

���
(47)
�
The department of human services on
current or prospective employees or contractors who have access to federal tax
information in order to comply with requirements of federal law, regulation, or
procedure, and on current or prospective employees, volunteers, contractors, or
contractors' employees or volunteers, subcontractors, or subcontractors'
employees or volunteers, whose position places or would place them in close
proximity to minors, young adults, or vulnerable adults, as provided by section
346-2.5;

���
(48)
�
The child support enforcement agency on
current or prospective employees, or contractors who have access to federal tax
information in order to comply with federal law, regulation, or procedure, as
provided by section 576D-11.5;

���
(49)
�
The department of the attorney general
on current or prospective employees or employees or agents of contractors who
have access to federal tax information to comply with requirements of federal
law, regulation, or procedure, as provided by section 28‑17;

���
(50)
�
The department of commerce and consumer
affairs on each control person, executive officer, director, general partner,
and managing member of an installment loan licensee, or an applicant for an
installment loan license, as provided in chapter 480J;

���
(51)
�
The department of commerce and
consumer affairs on each person, control person, executive officer, director,
general partner, and managing member of a digital asset company or applicant
for a digital asset charter, as provided in chapter
����
;

��
[
(51)
]

(52)
�

The university of Hawaii on current and prospective employees and contractors
whose duties include ensuring the security of campus facilities and persons;
and

��
[
(52)
]

(53)
�
Any other organization, entity, or the
State, its branches, political subdivisions, or agencies as may be authorized
by state law.
"

����
SECTION 5.
�
(a)
�

Notwithstanding any other law to the contrary, a company that
participated in the Hawaii digital currency innovation lab operated by the
department of commerce and consumer affairs and Hawaii technology development
corporation may continue conducting digital asset business activities until six
months after the company's completed application for a charter is submitted
pursuant to chapter
����
, or until the
commissioner of financial institutions approves or denies the application,
whichever occurs first; provided that the company shall submit a completed
application for a charter no later than March 1, 2027; provided further that
the commissioner, for good cause, may reduce or extend the six-month period.

����
(b)
�

The submission of an application for charter shall be evidenced through
the Nationwide Multistate Licensing System and Registry developed and
maintained by the Conference of State Bank Supervisors.

����
SECTION 6.
�
There is appropriated out of the general
revenues of the State of Hawaii the sum of $500,000 or so much thereof as may
be necessary for fiscal year 2026-2027 to establish and implement a digital
asset charter program pursuant to section 2 of this Act.

����
The sum appropriated shall be
expended by the department of commerce and consumer affairs for the purposes of
this Act.

����
SECTION 7.
�
Statutory material to be repealed is
bracketed and stricken.
�
New statutory
material is underscored.

����
SECTION 8.
�
This Act shall take effect on July 1, 2026;
provided that the digital asset charter requirements established by section 2 of
this Act shall take effect on January 1, 2027.

�
INTRODUCED BY:

_____________________________

Report Title:

DCCA;
Division of Financial Institutions; Digital Asset Companies; Digital Asset
Charter; Appropriation

Description:

Establishes
within the Department of Commerce and Consumer Affairs Division of Financial
Institutions, beginning 1/1/2027, a digital asset charter program for
licensing, regulating, and overseeing digital asset companies and digital asset
business activities.
�
Authorizes
companies that participated in the Hawaii Digital Currency Innovation Lab to
temporarily continue digital asset business activities without a charter in
certain circumstances.
�
Appropriates
moneys.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.