How to buy cryptocurrency in Hawaii

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Buying cryptocurrency is legal in Hawaii — regulators have just made it difficult for crypto companies to do business there. However, the state has recently announced that it will loosen its restrictions on cryptocurrency exchanges. A previous ruling by Hawaii’s Department of Commerce and Consumer Affairs’ Division of Financial Institutions (DFI) that required cryptocurrency exchanges in Hawaii to comply with the state’s money transmitter law, which had required the exchanges to hold cash reserves equal to their digital assets, will no longer apply.

On January 25, 2024, Hawaii’s Office of the Governor issued a press release detailing the DFI’s conclusion of its Digital Currency Innovation Lab (DCIL), which will end on June 30, 2024 and no longer require that digital currency companies hold a Hawaii-issued money transmitter license to conduct business within the state.⁽¹⁾

We’ll update this page if and when crypto exchanges that had previously avoided doing business in the state enter the market. Until then, Hawaiians have access to over a dozen licensed and regulated exchanges.

How to buy crypto in Hawaii through an exchange

You can buy crypto in Hawaii through exchanges that are either approved by DCIL or that are licensed as a Money Service Business (MSB) through the Financial Crimes Enforcement Network (FinCEN).⁽²⁾

Step 1: Compare and sign up with a crypto exchange

When comparing exchanges look at things like the number of coins supported, supported payment methods, and any extra features you might like to use, like an NFT marketplace or earning hub.

2. Sign up using a government-issued ID

Once you’ve chosen an exchange, keep in mind that all licensed exchanges in Hawaii are required to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.

These regulations require you to provide proof of a government-issued ID, your social security number and other important information to verify your identity when signing up for an account.

3. Buy your coins or tokens

After you’ve created an account with an exchange, select and purchase the coins you’d like.

Once you’ve made a purchase, please understand that you technically do not have full ownership over the coins or tokens you’ve purchased yet. Instead, the exchange holds them on your behalf.

To have full ownership over your crypto assets, you move them from the custody of an exchange and manage them with a non-custodial crypto wallet (learn more about these in the following section). This ensures you have total control over your funds and removes the risks associated with holding your coins on an exchange.

4. Get a non-custodial crypto wallet

A non-custodial crypto wallet is a type of software or a combination of hardware and software that helps you to store the private keys to your crypto assets. You can think of private keys like the password to your crypto that gives you access to your crypto on the blockchain.

When you purchase a crypto asset from a centralized exchange like Kraken, for example, the private keys for your crypto asset are kept in a wallet on that exchange. This type of wallet is often referred to as a custodial wallet.

Again, you don’t actually have control over the asset you’ve purchased until you hold the private keys for that asset in a non-custodial wallet.

As mentioned, non-custodial wallets include software and hardware wallets.

Software wallets remain connected to the internet at all times and are slightly less trustworthy than hardware wallets because of this.

These types of wallets include MetaMask and Exodus Wallet.

Hardware wallets help you to store the private keys to your digital assets offline. See our review of the best crypto hardware wallets on the market to learn more.

For a more extensive overview of non-custodial wallets, see our overview of the best crypto wallets on the market today.

Keeping your crypto secure

All centralized exchanges, including , are vulnerable to counterparty risks like hacking, theft and insolvency. Using a self-custodial or hardware wallet is widely accepted as the best way to improve the security of your funds. We've shared some of our top picks below.

Details about Hawaii crypto laws

After years of heavy restrictions on crypto companies, Hawaii will no longer require digital currency companies to hold a Hawaii-issued money transmitter license to conduct business within the state. Upon the conclusion of the DCIL program, crypto companies will be able to operate in the state as an unregulated business. However, the companies will still need to operate in accordance with applicable federal licensing or registration requirements.⁽¹⁾

Hawaii’s Digital Currency Innovation Lab (DCIL) began approving crypto businesses to operate in Hawaii in two stages, starting in 2020.

In the first stage, from March to May 2020, the state approved 12 of the 19 companies that applied. During the second stage, from January to February 2021, 14 more companies applied, and only 4 made the cut.

The popular exchange Robinhood was originally included for approval, though it was removed on January 13, 2021. Local media has speculated that the broker lost its license due to issues regarding compliance and reporting requirements.⁽¹⁷⁾

In 2020, Hawaii’s Division of Financial Institutions launched a two-year pilot program that allowed 16 crypto companies to do business within the state without a money transmitter license until June 2022.⁽²⁾ The program was then extended two years, with 11 crypto companies participating through June 2024.⁽³⁾ Other crypto exchanges like Kraken and Crypto.com have a money transmitter license and operate in the Aloha State.

The DCIL program was extended through June 2024, with 11 crypto companies currently participating in it.⁽¹⁸⁾ The program will end on June 30, 2024.

Hawaii cryptocurrency taxes

Hawaii doesn’t offer guidance on sales or state taxation on cryptocurrency transactions.

However, unlike fiat currency like US dollars, cryptocurrencies are considered property by the IRS.⁽¹⁹⁾ You’re required to follow the same tax rules as other property transactions, which means reporting capital gains or losses after:

• Exchanging one crypto for another crypto
• Exchanging crypto for fiat currency
• Receiving rewards such as cash back and bonuses in crypto

Luckily, investors can track, manage and calculate crypto taxes they owe with the use of crypto tax software. Most provide easy filing tools and forms generated by tax authorities.

Crypto coins in Hawaii

Because you have limited access to exchanges as a Hawaiian, you won’t find a vendor for all 20,000+ coins and tokens on the market. But you will find over 100 crypto assets supported on exchanges like Kraken, Crypto.com and Gemini.

Can I buy Dogecoin (DOGE) in Hawaii?

Yes, DOGE is listed on a number of exchanges that are licensed and regulated in Hawaii. These exchanges include Gemini, Kraken and Uphold.

Can I buy Ethereum and Bitcoin in Hawaii?

Yes, licensed exchanges in Hawaii sell both BTC and ETH.

You can also find Bitcoin ATMs that allow you to buy Bitcoin with cash. Transactions can come with a 3% to 5% mark up, though.

Can I use Binance in Hawaii?

No, you can’t use Binance or Binance.US if you live in Hawaii.

The crypto exchange Binance isn’t legal in any of the US states, and its subsidiary Binance.US isn’t available in select states, including Hawaii.

Who is most likely to be researching how to buy cryptocurrency in Hawaii?

Finder data suggests that men aged 25-34 are most likely to be researching this topic.

Know before you buy crypto in Hawaii

Keep in mind that Hawaii’s Digital Currency Innovation Lab (DCIL) has only approved crypto platforms that don’t yet have money transmitter licenses to operate in the state until 2024. And there are only a handful of other crypto companies that are licensed with FinCEN that also serve Hawaiian residents.

General things to note while buying and selling crypto include:

• Secure your wallet. A crypto wallet can be accessed if someone gets a hold of its keys and/or passphrases. Keep those details secure – preferably somewhere offline so to minimize risk of hacking.
• Read the fine print. Marketplaces and exchanges often aren’t liable if bad actors get access to your digital wallet or assets. Learn about the security measures in place to prevent access to your money.
• Watch out for scams. Unfortunately, scams seem to exist in every industry and crypto is no exception. Phishing scams are common, typically involving a scammer pretending to be a support rep and asking a user for passcodes/keys to their account. Contact customer support if you think something suspicious is going on.
• Cryptocurrency is volatile. The value of any coin can change in a matter of seconds, spelling major losses or gains that depend on interest and how much you invest.