Crypto is enticing; what you need to know

HONOLULU (KHON2) — The Hawai‘i Digital Currency Innovation Lab (DCIL) wrapped up its operations on June 30.

The project is a collaboration between the Hawai‘i Department of Commerce and Consumer Affairs Division of Financial Institutions (DFI) and the Hawai‘i Technology Development Corporation (HTDC).

It was initiated in 2020 to explore digital currency activities within the state and assess the necessary regulatory framework for these companies.

Key findings and implications:

Licensing requirements : The DCIL found that digital currency companies no longer need a Hawai‘i-issued money transmitter license to operate within the state. These companies can continue their activities as unregulated businesses within Hawai‘i, provided they comply with applicable federal regulations.

These regulations include those set forth by the Financial Crimes Enforcement Network, the Securities and Exchange Commission and the Financial Industry Regulatory Authority, focusing on consumer protection, anti-money laundering measures and other pertinent federal requirements.

Consumer Awareness : As the state transitions from this study to a broader understanding of digital currency, Banking Commissioner Iris Ikeda emphasized the importance of consumer awareness.

She stated, “Our focus will remain on ensuring that consumers are aware of the risks associated with this matter. We urge the public to stay informed when utilizing any form of digital currency.”

Recent warnings and fraud alerts

The Federal Bureau of Investigation (FBI) recently issued a warning about a new scam tactic targeting cryptocurrency users. Criminals are posing as lawyers from fake law firms on social media and messaging platforms, offering to help victims recover their lost funds.

These fraudsters claim to be authorized to investigate such cases and may falsely reference involvement with the FBI, Consumer Financial Protection Bureau or other government agencies to appear legitimate.

Between February 2023 and February 2024, victims reported losses exceeding $9.9 million to the FBI’s Internet Crime Complaint Center (IC3).

Tips to protect yourself

1. Be wary of advertisements : Research any company advertising cryptocurrency recovery services. Be cautious if the company uses vague language, has a minimal online presence and makes unrealistic promises about recovering funds.
2. Verify contacts : If an unknown individual contacts you claiming to recover stolen cryptocurrency, do not release any financial or personal information and do not send money.
3. Law enforcement fees : Remember that law enforcement agencies do not charge victims for investigating crimes. If someone claims to be affiliated with the FBI, contact your local FBI field office to confirm their identity.

Additionally, the FBI has advised against using cryptocurrency money transmitting services that are not registered as Money Services Businesses (MSB) according to federal law.

Using unregistered services can put you at risk of losing access to funds after law enforcement operations target these businesses.

Reporting and resources:

If you are a victim of cryptocurrency scams or other fraudulent schemes, you are encouraged to file a report with the FBI’s Internet Crime Complaint Center here.

For further guidance and information on avoiding cryptocurrency scams, you can visit the Federal Trade Commission’s webpage here.

For more information on the DCIL and its findings, you can visit the here.

DCIL’s indicated this is the end of their research phase. They emphasized both the opportunities and risks associated with digital currencies and highlighted the importance of regulatory compliance and consumer vigilance in this evolving financial landscape.