As stated in a recent post, there is a bill in California that would allow Cannabis businesses to pay their state taxes in Stablecoins which would go a long way towards mass adoption, the issue is as this adoption approaches, the powers that be are going to turn their attention more and more to crypto and the companies that deal in it.
Recently, the New York Attorney General’s office has alleged that Bitfinex’s parent company IFinex used USDT funds to cover loses totally up to $850 million dollars USD.
NY Attorney General Letitia James said in a statement “Our investigation has determined that the operators of the ‘Bitfinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds”.
So what does this have to do with the Cannabis Industry? On the surface, very little unless you take into account that the goal is to use Cryptocurrency as the currency of choice for the Cannabis Industry which is currently a cash only industry due to federal regulation and the stigma of Crypto being used for nefarious reasons is only recently beginning to dissipate as the financial sector turn their eyes back to the industry.
USDT has been a mainstay in the crypto/stable coin space for some time and have made their name as a digital asset pegged to the US Dollar, that reputation has come under more scrutiny in the space lately due to USDT falling below $1.00 USD on multiple occasions and the whole point of Stablecoins are they should keep their value aka stay stable as opposed to other Cryptocurrencies like Bitcoin or altcoins.
According to coinmarketcap.com Tether (USDT) is defined as a cryptocurrency with a value meant to mirror the value of the U.S. dollar. The idea was to create a stable cryptocurrency that can be used like digital dollars. Coins that serve this purpose of being a stable dollar substitute are called “stable coins.” According to their site, Tether converts cash into digital currency, to anchor or “tether” the value of the coin to the price of national currencies like the US dollar, the Euro, and the Yen.
So when news that crypto is being used to hide financial dealings, it comes less and less likely that government will allow citizens to use it openly, especially for Cannabis which itself is still controversial. At this point, the question will need to be asked how can Bitcoin and Cryptocurrencies peg to Bitcoin be used instead of so-called Stablecoins?
We still have the issue of Stablecoins and the counter-party risk involved where companies that issue Stablecoins may or may not have the amount of USD or assets they claim to.
Click here for more on Stablecoins and Counter-Party Risk
This is where advocacy and activism come into play, we of the Crypto/Cannabis community have to do our part to show that issues like Bitfinex/Tether are not the norm and that Crypto is a viable option for the future of the Cannabis Industry.
Attorney General James Announces Court Order Against “Crypto” Currency Company Under Investigation For Fraud. (n.d.). Retrieved from https://ag.ny.gov/press-release/attorney-general-james-announces-court-order-against-crypto-currency-company-under
DE/Coindesk, N. (2019, April 26). Bitfinex Covered $850 Million Loss Using Tether Funds, NY Prosecutors Allege. Retrieved from https://www.coindesk.com/bitfinex-ny-prosecutors-tether-850-million-allege