A possible ban on bitcoin for marijuana purchases in Washington State has failed, according to a source close to the matter, who wished to remain anonymous. SB 5264, the much-discussed ban on virtual currency for marijuana, failed to make it out of committee. Further, a Senator that brought the bill forward, most likely Senator Ann Rivers, has withdrawn her support of the bill after a hearing in the Washington State Senate highlighted Bitcoin’s positives, not its potential negatives.
The bill to ban virtual currency use in the cannabis industry was brought forth by the founders of Payqwick, which some refer to as the “Paypal of Pot”.
It didn’t take long for their concerns to be downplayed by multi-state agencies and a company specializing in bitcoin payments for the marijuana industry.
No Virtual Currency Ban
Founders of Bitcoin point-of-sale service Posabit, as well as a lawyer from Perkins Coie, spoke against a virtual currency ban for cannabis businesses.
“We just follow the Department of Financial Institutions lead on this issue,” said James Paribello, legislative liaison for the Liquor and Cannabis Board. “They have licensed businesses, [and] there are businesses licensed by us operating in this space and accepting and transacting through [bitcoin].” LCB had no concerns over Posabit.
“We rely on the [Division of Financial Institutions] to make the call as to who can play in this space and since the DFI has said it’s okay, we’re okay,” said Mr. Paribello. The Senators, who had certain prejudices about Bitcoin, asked numerous questions about digital currency in general.
“When I read about Bitcoin on the international space, it’s talked about with international drug transactions, the black economy, a way to get around currency controls, a way government can track things and anonymity,” said Senator Michael Baumgartner, who came away from the hearing intrigued about Bitcoin’s ability to limit the amount of marijuana cash being transported by armored car in his state.
Perkins Coie lawyer Joseph Cutler argued: “Before we regulate currency [we] might want to understand how it works. What are the benefits? What does it do? It is a transparent, auditable transaction ledger. Every transaction done today is posted to that public ledger. This idea that it’s untraceable is simply false. People say Bitcoin is anonymous, that’s also false. We call Bitcoin pseudonymous, which is better than cash. In marijuana, cash is king, and there’s no traceability of customers for cash spent in marijuana stores. In virtual currency, that is not the case.”
Cash is dangerous, suggested Posabit founder Ryan Hammond. “It’s dangerous to hold, dangerous to move, and you become a target of potential crimes.”
Posabit Chief Compliance Officer, John Baugher, echoed this concern: “If law enforcement has questions about a certain transaction, and if they paid in cash, there is no way to answer this question.”
The failed Washington State bill to ban bitcoin for pot received widespread press coverage before the hearing.
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Washington State Bill to Ban Bitcoin for Pot Fails