Hawaii (HI): Bitcoin and virtual-currency law

Summary

Hawaii has the most unusual regime in this group:

• History. For years Hawaii's money-transmitter law effectively kept crypto exchanges out. Firms could not satisfy the US-dollar permissible-investment and trust rules for customer crypto, and several exchanges left in 2017.
• 2020–2024 sandbox. Under the Digital Currency Innovation Lab (DCIL), firms operated under a sandbox.
• Since 2024-07-01. Crypto firms need no Hawaii licence at all; they are "unregulated" at state level.
• 2026 kiosk law. Hawaii did not license kiosks. Instead it banned machines that take cash (or card) for crypto, from 2026-10-01. That makes Hawaii, by AARP's and local reporting, the first state to ban deposit kiosks while allowing withdrawal-only ones.

1. Money-transmitter licensing and virtual currency

• DFI 2023 guidance ("Guidance for Digital Currency Companies Applying for a license in Hawaii?", 2023-05-26; PDF, saved):
• The DFI could license crypto companies "only" if they qualify under HRS 489D. They generally cannot, because of the statutory requirements on permissible investments in US dollars, trust accounts and bonding.
• "The study has shown HDFI and HTDC that the money transmitter laws are not well suited to oversee digital currency activity."
• A 2022 bill for a separate digital-currency licence failed; the 2023 version was pending.
• Crypto firms with pending money-transmitter applications "should withdraw their applications."
• DFI release, 2024-06-28: the DCIL ends 2024-06-30 (release, saved):
• "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."
• Companies must still comply with federal FinCEN, SEC and FINRA requirements.
• Practical effect: no state licence is needed to run a bitcoin exchange or custodian serving Hawaii residents. Kiosks that take cash have been illegal since 2026-10-01.

2. Virtual-currency-specific statutes and guidance

3. Crypto ATM / kiosk law

HB 1642, H.D. 1, S.D. 1, C.D. 1 (2026), "Relating to Consumer Protection", Act 224. The act takes effect on approval; the prohibition starts 2026-10-01. New section in HRS ch. 481B (text saved):

• "(a) Beginning October 1, 2026, it shall be an unlawful practice under this chapter for an operator to own, operate, or manage in the State a digital financial asset transaction kiosk that accepts United States currency from a customer in exchange for a digital financial asset."
• "(b) Nothing in this section shall prohibit an operator from owning, operating, or managing ... a ... kiosk that accepts a digital financial asset from a customer in exchange for: (1) A different digital financial asset; or (2) United States currency." In other words, selling crypto for cash at a kiosk is still allowed.
• "(c) Each transaction in violation of subsection (a) shall be a separate offense."
• "Digital financial asset transaction kiosk" means a device "capable of accepting or dispensing United States currency by means of credit card or cash in exchange for a digital financial asset". The definition of "digital financial asset" follows California's DFAL wording.
• Legislative findings cite FBI IC3 data (10,956 complaints, about $246.7M in 2024) and the DC and Iowa AG investigations finding "as high as ninety per cent" fraudulent transactions.
• How DCCA reads it (spokesperson William Nhieu, via the Star-Advertiser Kokua Line, 2026-08-02): owning a kiosk that accepts cash, or a cash equivalent such as debit, is unlawful even if it also accepts credit cards. OCP "welcomes reports" of credit-card-only kiosks. OCP testimony had advocated an outright ban.
• Reported losses: Hawaii residents lost $3.85M to kiosk fraud in 2025, nearly four times 2024 (AARP Hawaii via Star-Advertiser; Hawaii News Now, 2026-08-12).
• Other 2026 kiosk bills:
• SB 2387 (digital financial asset transaction kiosks) reached H.D. 1 and went to conference, but no C.D. 1 exists on data.capitol.hawaii.gov, so it died in conference (our inference).
• HB 2003 and HB 1647 were deferred (Bitcoin Laws tracker snapshot).

4. Tax treatment

No Hawaii Department of Taxation crypto guidance was retrieved (gap). Hawaii income tax generally conforms to the federal Internal Revenue Code. How the general excise tax applies to crypto transactions is unverified.

5. Notable enforcement

• None retrieved (gap). The DFI's posted orders page lists a 2025 Sigue Corporation consent order (a money transmitter, not crypto).
• Hawaii is not among the 34 participating agencies listed in Appendix A Coinme consent order, App. A–B (completeness check, 2026-10-09).

6. Bills, 2026 session

Pending: none. The 2026 session adjourned in May and the 2027 session convenes in January 2027.

7. Contested and fringe claims

• "Hawaii banned crypto ATMs." Some headlines say so (The Sun: "new 'ATM' rule ... preventing" deposits). The law is narrower: it bans cash- and card-in kiosks only. Withdraw-to-cash and crypto-swap kiosks remain legal.
• "Unregulated" crypto businesses. The DFI's own wording ("unregulated business") is unusual. Consumer advocates see a protection gap. Industry sees freedom from the 2016–2024 money-transmitter barrier, which led Coinbase to leave Hawaii in 2017 (the Coinbase departure is from memory; unverified here).
• Ban versus regulation. The OCP argued kiosks are "used more for fraud than for legitimate transactions" and favoured a total ban. Operators argue kiosks serve cash users. The legislature chose a deposit-only ban.

Saved sources (sources/states/hi/)

See sources/states/hi/INDEX.md.

Gaps

• capitol.hawaii.gov (bill status pages and HRS) blocked automated access (Cloudflare), so:
• Act 224's signing date and the final statuses of other bills come from secondary sources or from file-existence checks on data.capitol.hawaii.gov;
• the current HRS 489D text was not retrieved.
• Department of Taxation guidance.