The U.S. state of Hawaii has established a regulatory sandbox for digital currency companies, allowing issuers to conduct business without obtaining a license

The Hawaii government announced a regulatory sandbox for digital currency companies this week, The Block reported on March 19.

The state of Hawaii has announced a two-year plan to establish a "Digital Currency Innovation Lab" to allow issuers of digital currencies to operate in Hawaii without obtaining a state currency issuer license. The governor of Hawaii said in a statement that the government hopes to learn more about digital currencies and related activities over the next two years and look to formulate relevant legislation.

The statement said:

The two-year plan will help guide legislation and determine the future of digital currency in Hawaii.

Businesses operating in Hawaii can now apply to the Digital Currency Innovation Lab by May 1, 2020. However, selected participants will have to demonstrate their financial information and technical expertise and hold the necessary capital, according to the statement.

The project stems from a partnership between state agencies: the Departments of Commerce and Consumer Affairs, the Division of Financial Institutions (DFI), and the Hawaii Technology Development Corporation (HTDC).

DFI Commissioner Iris Ikeda said the agency is also sending a "no action" message. This means that companies that conduct unlicensed money transmission in Hawaii will not be affected if they are participants in the above program. The DFI will not take action against participants in the program.

Ultimately, the two-year program is meant to guide future policy. Len Higashi, acting executive director of the Hawaii Technology Development Corporation, said the insights gained from the project could also open the door to further cryptocurrency adoption. According to Higashi, this pilot project has the potential to make Hawaii an early adopter of cryptocurrency.