Ann Rivers, a Washington State senator, introduced a bill last week to ban the use of Bitcoin in purchasing or selling marijuana-related products.
Rivers claims that Bitcoin isn’t transparent enough to be used as the underlying currency of the marijuana industry. She noted in the bill that Bitcoin does not have an actual value recognized by the US government.
The bill reads:
“‘Virtual currency’ does not include the software or protocols governing the transfer of the digital representation of value or other uses of virtual distributed ledger systems to verify ownership or authenticity in a digital capacity when the virtual currency is not used as a medium of exchange. A marijuana producer, marijuana processor, or retail outlet must not pay with or accept virtual currency for the purchase or sale of marijuana or any marijuana product.”
Flawed logic
The logic and reasoning behind Rivers and the senate in pushing such a bill are severely flawed. Over the past two years, regulators have put in efforts in an attempt to regulate the marijuana industry across the US. Many states have already legalized marijuana, acknowledging the medical benefits of the product and the magnitude of the market.
Yet a group of regulators is trying to slow down the growth of the marijuana industry by effectively eliminating any financial services being offered to the industry. Banks are denying services to industry leaders after being pressured by the government. Financial service providers are skeptical towards providing the necessary infrastructure to facilitate the transfer of money.
Rule of cash
In the end, marijuana businesses are left with cash, the most anonymous form of money in existence. Bitcoin transactions can be traced down using the Bitcoin public Blockchain. KYC policies set in place by Bitcoin exchanges can be used to track down exact identities of users using Bitcoin to launder money.
With cash, however, it is virtually impossible to trace the origin of money or payments. The government leaves the marijuana industry with the most anonymous form of money and is trying to ban Bitcoin’s involvement within the industry for being opaque and not transparent.
Thus, if it truly is the intent of the government to eliminate anonymity in money transfers, the government has to ban cash and re-introduce banking services to marijuana businesses for greater transparency. In fact, Bitcoin has to be encouraged as it is a more transparent form of money in contrast to cash as of now.