United States – Hawaii

On conduct, Act 159 (SB3255 CD1) took effect July 1, 2026, requiring all Hawaii merchants to accept cash for in-person goods and services and permitting nickel-rounding of cash transactions, a direct legislative response to the U.S. Treasury ceasing penny production; card, electronic-funds-transfer, check, gift-card and money-order payments are exempted from the rounding provision. This is a confirmed, Tier-1-sourced, already-in-force conduct rule bearing directly on merchant payment-acceptance policy statewide.

Other Developments

SB3184 bank digital-asset custody bill. A separate bill, SB3184, would authorize state-chartered banks and credit unions to offer digital-asset custody, staking, and fiduciary transaction services under Division of Financial Institutions oversight, with an effective date of September 1, 2026. This is distinct from SB2757's nonbank charter regime; it addresses the bank-channel pathway into digital-asset services specifically, and carries lower confidence, held at probable, since the sole source available this cycle is a Tier-4 bill-tracking aggregator rather than a primary bill-text citation. Act 224 crypto-kiosk fraud controls. House Bill 1642 was enacted as Act 224, barring crypto-kiosk operators from accepting more than a set daily transaction cap per customer and mandating blockchain-analytics fraud screening plus a forty-eight-hour hold for new customers, with an anticipated effective date of October 1, 2026. This is a consumer-facing fraud-control measure at the point of a specific payment instrument, distinct from the licensing questions addressed by SB2757 and SB3184.

Cross-Monitor Connections

Act 224's blockchain-analytics screening mandate has an AML/CFT dimension that the financial-integrity monitor's D5 and D7 domains address directly; this brief confines its treatment of Act 224 to the consumer-protection and payment-acceptance angle appropriate to the W10 and W1a modules. Similarly, SB2757's and Act 224's underlying digital-asset facts are also composed by the crypto monitor under its own crypto_licensing and consumer_protection modules; the crypto monitor's stablecoin_regime module is the designated producer for this jurisdiction's W2 slot, and no first-party world-payments prose is authored there.

Outlook

The most consequential near-term question is whether SB2757 clears the House and reaches the Governor's desk, which would determine whether Hawaii's digital-asset charter regime takes effect on schedule January 1, 2027; a secondary question is whether SB3184's September 1, 2026 effective date holds given its currently thin sourcing. Act 159's cash-acceptance mandate is already in force and its principal open question is one of merchant compliance and enforcement uptake rather than legislative uncertainty. Act 224's October 1, 2026 effective date approaches next, and confirming its requirements against a primary session-law citation rather than a secondary aggregator mirror remains the key sourcing gap for that instrument.

2 earlier updates not shown here.

Standing brief · as of 5 July 2026

Written before the update above. Where they differ, the update is the more recent position.

Lead Signal

This cycle establishes the World Payments Monitor's baseline coverage of Hawaii (US-HI), the first structured sweep of the jurisdiction across all fourteen module codes in the WPM spine. The defining structural fact is architectural simplicity: Hawaii regulates nonbank payments activity through a single state statute, the Money Transmitters Modernization Act (HRS Chapter 489D), administered by the Division of Financial Institutions (DFI), with no separate electronic-money or prepaid-instrument licensing category and no bespoke stablecoin-issuance regime. Effective July 1, 2024, digital-currency and crypto activity was carved out of the 489D licensing perimeter entirely following the conclusion of the four-year Digital Currency Innovation Lab sandbox, meaning Hawaii's approach to digital assets is now a negative exemption rather than an affirmative licensing track, with mixed fiat/crypto businesses still required to license the USD-denominated leg of their activity. The result is a light-touch structural profile that increasingly delegates crypto and operational-resilience risk to federal backstops rather than building bespoke state infrastructure.

The second defining signal of this baseline is the deteriorating state of correspondent-banking access across the Central and Western Pacific, a corridor in which Hawaii-headquartered banks, principally Bank of Hawaii, function as the primary U.S. settlement node. The region has seen a 60% drop in correspondent banking relationships since 2011, prompting the United States and Australia to convene a Pacific Banking Forum in 2024 bringing together Pacific finance ministers, central bank governors and commercial banks, alongside a US$77 million World Bank/Pacific Islands Forum remediation project. Bank of Hawaii's own regulatory disclosures acknowledge that AML-program effectiveness is a factor regulators weigh when reviewing bank mergers and BHC acquisitions, underscoring how correspondent access and compliance posture are now intertwined considerations for the state's largest settlement institutions.

Other Developments

Hawaii's banking-sector structure is consolidating. Hope Bancorp completed its approximately $78.6 million all-stock acquisition of Honolulu-based Territorial Bancorp on April 2, 2025, reshaping the state's thrift tier after Territorial shareholders had rebuffed a competing bid; First Hawaiian Bank remains the state's largest institution by assets, at nearly $25 billion, and has adopted third-party digital-banking platforms to modernize its commercial and payments operations. A further, larger commercial-banking transaction is now pending: Bank of Hope, parent of Hawaii's Territorial Savings unit following the 2025 deal, has announced an agreement to acquire SMBC's Americas commercial banking division, comprising roughly $2.5 billion in commercial and CRE loans and $2.7 billion in deposits on a net-book-value basis, with terms undisclosed and closing expected in the second half of 2026.

Conduct and safeguarding oversight remains anchored in HRS 489D's bonding and permissible-investments framework, under which licensees must hold a bond or security device and maintain permissible investments matched to outstanding payment instruments, subject to commissioner waiver or letter-of-credit substitution. DFI's enforcement toolkit was exercised in March 2024, when it issued a cease-and-desist order against licensed money transmitter Sigue Corp after finding the firm did not meet HRS 489D's financial-condition requirements, following roughly 16,000 transactions worth about $9 million in the state the prior year. More broadly, Hawaii has no dedicated operational-resilience regime, interchange-fee-cap or surcharge-limit statute, or merchant-acquiring and high-risk-MCC statute; these gaps are filled respectively by DFI examination rules and the general breach-notification statute, by default Visa and Mastercard scheme rules, and by card-network rules layered on the general HRS 480 unfair-or-deceptive-practices framework. On the consumer-protection side, that same HRS 480 framework, enforced by the Office of Consumer Protection with treble-damages and attorney-fee remedies, is the only recourse available to Hawaii payments users, since the state has no authorized-push-payment fraud reimbursement scheme; FBI Honolulu-cited IC3 data show elder-fraud losses in the state nearly tripling from about $10 million to $28 million over the preceding three years. Innovation activity is now centered on Hawaii Technology Development Corporation's HI-CAP program, which deployed $62 million in federal funding secured in 2022 to expand capital access for small businesses and fintech-adjacent ventures, following the June 30, 2024 conclusion of the Digital Currency Innovation Lab sandbox.

Cross-Monitor Connections

Three findings from this baseline are flagged onward to the Financial Integrity Monitor rather than developed as WPM conclusions. First, Hawaii's unregulated digital-currency sector, the product of the 2024 licensing carve-out, now relies entirely on the federal FinCEN/BSA backstop, including MSB registration, for AML coverage, a gap whose illicit-finance dimension sits outside WPM's market-access remit. Second, the Pacific correspondent-banking de-risking trend carries a sanctions-evasion and informal-flow risk dimension beyond WPM's scope, given that a loss of banking access can push settlement activity into unregulated channels. Third, the sharply rising elder- and crypto-scam fraud losses reported via IC3 have a financial-crime and fraud-typology dimension that belongs with FIM's illicit-finance analysis rather than WPM's consumer-protection tracking.

Outlook

The nearest dated catalyst is the expected second-half-2026 close of Bank of Hope's acquisition of SMBC's Americas commercial banking division, which would further concentrate commercial-banking capacity among Hawaii-linked institutions. The Pacific Banking Forum's remediation track, backed by Treasury, Australia, the Pacific Islands Forum and the World Bank, will be the primary channel to watch for whether correspondent-banking access to the Central and Western Pacific stabilizes or continues to erode; any material shift would flow directly through Hawaii-headquartered settlement banks. Absent new state legislation, Hawaii's light-touch, single-statute regulatory perimeter is likely to remain stable, with the digital-currency carve-out and the absence of bespoke stablecoin, resilience, interchange, and acquiring regimes persisting as the baseline condition against which future cycles will be measured.

Outlook

The coming cycle's key questions are whether SB2757 reaches enactment in time for its 2027 effective date, whether SB3184's thinly-sourced September 2026 effective date holds, and how Act 224's October 2026 effective date plays out in practice for kiosk operators statewide.

2 earlier updates not shown here.

Standing brief · as of 5 July 2026

Written before the update above. Where they differ, the update is the more recent position.

Regulatory Status

Hawaii's payments regulatory perimeter is defined by a single state statute, the Money Transmitters Modernization Act (HRS Chapter 489D), administered by the Division of Financial Institutions, with no bespoke EMI/PPI, stablecoin, or DORA-equivalent framework; digital-currency activity was carved out of the licensing perimeter effective July 1, 2024 following conclusion of the Digital Currency Innovation Lab sandbox, leaving crypto oversight to federal BSA/AML and FinCEN backstops. Safeguarding of transmitted funds rests on HRS 489D's bonding and permissible-investments regime, reinforced by a full enforcement toolkit that DFI exercised against licensed money transmitter Sigue Corp in March 2024. Consumer protection runs through the general HRS Chapter 480 unfair-or-deceptive-practices framework enforced by the Office of Consumer Protection, with no dedicated authorized-push-payment fraud reimbursement scheme, even as FBI Honolulu-cited IC3 data show elder-fraud losses nearly tripling to about $28 million. Correspondent-banking access is under strain: Bank of Hawaii functions as a key U.S. settlement node for the Central and Western Pacific, a corridor that has seen a 60% drop in correspondent banking relationships since 2011, prompting a 2024 US Treasury-Australia Pacific Banking Forum and a US$77 million World Bank remediation project. Hawaii's banking sector is consolidating, illustrated by Hope Bancorp's approximately $78.6 million acquisition of Territorial Bancorp completed April 2, 2025, and by Bank of Hope's pending acquisition of SMBC's Americas commercial banking division expected to close in the second half of 2026.

Outlook

Absent new state legislation, Hawaii's light-touch, single-statute perimeter is likely to persist, with digital-currency, stablecoin, resilience, interchange, and acquiring activity continuing to be governed by exemption, scheme rules, or federal backstop rather than bespoke state frameworks. The nearest dated catalyst is the expected second-half-2026 close of the Bank of Hope-SMBC transaction; the Pacific Banking Forum's remediation track is the primary channel to watch for whether correspondent-banking access to Hawaii's Pacific corridors stabilizes or continues to erode.