A recent pledge by US Senate Leader Chuck Schumer to end the federal cannabis ban could have damaging effects on Bitcoin (BTC) and the wider digital currency industry.
Schumer and fellow Democratic Senators Ron Wyden and Corey Booker issued a joint statement on February 1, announcing their intention to comprehensively reform the federal cannabis legislation. The statement noted the disproportionate impact of the war on drugs on people of color. It says:
“The war on drugs has been a war on people – especially of people of color. Ending the federal marijuana ban is essential to correcting the mistakes of this failed war and ending decades of damage done to communities of color across the country.”
Even in states where cannabis is legal, dispensary owners are still forced to operate outside the traditional banking sphere. The federal ban has meant thus far that most banks have been unwilling to take the risk of doing business with cannabis stores, effectively forcing owners to run a cash business.
Cryptocurrency and hemp, particularly in relation to legislation in the United States, both originated in the same decade. Both have traditionally faced many of the same difficulties in gaining social acceptance, both from legislators and regulators, or even the common people.
Perhaps it should come as no surprise that cryptocurrency projects have stepped in to fill the void left by banks in the legal cannabis industry. In addition to the birth of many marijuana-inspired cryptocurrency tokens, and the vision of blockchain technology used to change the supply chain from seed to sale, the emergence of cryptocurrencies in the hemp industry also gave dispensaries an alternative to cash payments, and a way to store wealth.
But if hemp is really to be legalized at the federal level, what will happen to the blossoming relationship between weed and cryptocurrencies? Will the cryptocurrency use be effectively robbed?
Michael Wagner, CEO of Multichain Ventures, which provides blockchain payment solutions to the cannabis industry, told Cointelegraph that it is possible that acceptance from regular banks could nullify the need for business owners to use the cryptocurrency. Wagner said:
“Regarding the utility of cryptocurrencies in the event that traditional financial centers open up for these businesses, I will admit that it reduces the appeal of a blockchain-based solution.”
However, the impact of such an event will probably not be felt, says Wagner, who says the lack of legal clarity about cryptocurrencies has made it difficult for hashish users to join yet.
“My experience, in countless conversations with cannabis operators, has been that the cryptocurrency has not been widely adopted despite the friction that exists in financial services today. The lack of clarity surrounding the legitimacy of cryptocurrencies, as well as the understanding of technology, has created a major barrier. Front entry. “
The drive to produce a digital payment system for the cannabis industry, which has seen Multichain Ventures working alongside Nevada on a blockchain-based pilot program, is an example of trying to break that barrier, says Wagner.
But regardless of the legal status of cannabis, Wagner says that using cryptocurrency comes with its own benefits, in addition to being just a way to store wealth.
Moreover, our internal thesis was, and continues to be, that decentralized financial ecosystems provide a major benefit on their own. […] To this end, while traditional banking will open up competitors, the innovation in cryptocurrency is still superior in almost every way. Faster and cheaper transactions. Greater transparency. “
Wagner says he supports calls to legalize cannabis and believes the cryptocurrency will open a path for itself regardless of the following:
“I fully support greater access to cannabis businesses through legislation, but I think we’ll find attractive use cases for cryptocurrency assets regardless.”
The legal cannabis industry has been estimated to be worth nearly $ 20 billion globally in 2020, even amid the COVID-19 lockdown. For context, the value of hashish sold on the black market is more than 10 times higher.
Senators Schumer, Weiden, and Booker plan to release a draft reform debate by early 2021. Cannabis stocks increased numerous in the wake of their official statement.