New Hawaii bill seeks to create state-led blockchain working group

Introduced in Hawaii's House of Representatives on Monday, the bill calls for the formation of a blockchain working group led by the state's economic development agency.

A new partisan bill introduced by Democrats in Hawaii's House of Representatives on Monday is advocating a targeted strategy for studying and supporting the use of blockchain technology by individuals, firms and state agencies.

Hawaii House Bill 622 calls for the passage of an act that would require the state's economic development agency, the Hawaii Technology Development Corporation, to create a blockchain working group that would both recommend a definition for blockchain and offer recommendations for the adoption of the technology. The introduction to HB622 states:

“The legislature recognizes that the distributed ledger format that blockchain technology functions as can be leveraged to support an array of government and public-sector applications, including land registration, identity management, supply chain traceability, health care, corporate registration, taxation, voting, digital currency and payments, and legal entities management. Such a technology requires an educated and thorough approach so that the implementation of blockchain technology in the State does not impede innovation and growth.”

The bill provides a detailed outline of how the proposed working group would be set up. It suggests that the chairperson of the board of directors at the Hawaii Technology Development Corporation would serve as the chair of a newly created task force that would recruit members from various state agencies to contribute their input. In addition to agency designees, the task force would invite representatives from multiple entities in civil society.

These representatives would include specialists from the information and communication technology sectors: technology manufacturers, software and service providers, enterprises of all scales, blockchain technology experts, academic researchers, rural and urban stakeholders, nonprofit organizations, and consumer advocacy groups, among others. The bill specifies that many of these civil society representatives should be invited to join the task force on the basis of their existing engagement in various activities related to blockchain technology — whether research, use or development.

If the proposed legislation is successful, the working group would convene within 90 days of the act's passage and would be expected to submit a report and recommendations to the state legislature — including its definition of blockchain, proposed opportunities for the technology's adoption by state and private actors, as well as any suggested further legislation — no later than one month prior to the convening of the house's regular session of 2022. The working group would, moreover, be disbanded by June 30, 2022.

In early 2020, Hawaii began considering a bill dedicated to digital assets that would be supportive of their custody by banks. The state also established a digital-currency sandbox in March 2020 aimed at attracting crypto businesses to the state.

Part of the impetus behind the new sandbox was to address the fallout of the state's stringent regulations requiring crypto firms to hold an equal sum of fiat as their clients' crypto holdings, which had driven major crypto firms, such as prominent United States-based exchange Coinbase, to relocate their operations outside of the state.