Except that it isn't. At some point your coins have to be converted to USD. You can't pay your employees in cryptocurrency, you can't pay your electric bill in cryptocurrency, you can't pay your rent/mortgage in cryptocurrency. If you think just because you did a USD -> coin -> USD flip that no one will consider it laundering or ask where the proceeds came from, guess again.

> You can’t pay your electric bill in crypto currency.

I’m from Hanover, Germany and was surprised to see that since September 2016 my electric/gas/water company added a QR code to their bills to easily pay bills with Bitcoin [1] (They have super informative bills with easy to read charts as well). They even have service center support staff that will help you if you don’t know how to get/use bitcoin. There were (haven’t checked in a while) multiple listings for flats (we Germans tend to rent) that offered payment in bitcoin a year back and multiple little bars and cafes also offered payment with Bitcoin. I’m pretty sure I could live by doing >80% of all my outgoing payments in Bitcoin (if it weren’t for the high tx fees).

[1] - https://blog.energybrainpool.com/en/german-regional-utility-...

I paid my electric bill ($2400/mo) in BTC in 2014 at the first bubble for a while because I was runninga 13 terrahash mine from my spare bedroom. I used a lot of weird methods to do it. My friend did it once using this service where someone would pay your bill and the BTC would be held in escrow. The card used was fraudulent and now he has to pay his electric bill in cash for his home and business.

You definitely CAN pay your bill in BTC, it's just harder than most people want to mess with.

> using this service where someone would pay your bill and the BTC would be held in escrow. The card used was fraudulent

Jack's complete lack of surprise has reached a new low.

You may not be able to directly pay entities, but you can easily do so through a liquidity aggregator. If that aggregation vehicle is through a privacy-focused coin like Monero or Zcash, or anything onion routed (e.g. Lightning network), how exactly do you demonstrate laundering?

This really is no different than dealing in cash presently. Employees still need to report their income, even when paid in cash, so even in that event they'd still be subject to any laundering concerns of the federal government given the paper trail follows back to the dispensary entity. Same with any other entities they're paying in cash (unless they are dodging reporting requirements).

Crypto solves the problem (partially) of where to store your revenue instead of a bank. Its just a better way than the alternative of paying security outfits to guard your heaps of cash— its judgment-resistant and reasonably easy to liquidate.

The biggest problem with that use case right now is obviously price fluctuations. Not sure anyone is comfortable using a volatile asset class for that at present.

> Crypto solves the problem (partially) of where to store your revenue instead of a bank.

How exactly? You run a pot shop and end the day with $10,000 in USD. What happens next?

Go buy Monero from local Monero.

The GP is saying that after you have the cash in hand from your customers, how do you transfer it into a digital currency like btc or monero or anything else?

You need to physically have an armored transport take it to whoever is selling you the cryptocurrency.

Edit: I guess that's a potentially profitable but unfulfilled niche. Create a company that can take cash in big amounts and sell cryptocurrency. Not sure how feasible is it but that is the missing link as I see it.

> Create a company that can take cash in big amounts and sell cryptocurrency. Not sure how feasible is it but that is the missing link as I see it.

The problem is they would fall under the same money laundering rules that banks are and would probably not want to take dispensary cash. Even if they do take the cash, where would they deposit it?

> Edit: I guess that's a potentially profitable but unfulfilled niche. Create a company that can take cash in big amounts and sell cryptocurrency. Not sure how feasible is it but that is the missing link as I see it.

That just pushes the problem down the road to somebody else, though. At the end of the day somebody's going to have a huge pile of cash, and no bank will accept it without knowing where it came from.

You have a point.

I guess this really does boil down to a federal vs state legality then?

So if it's legal in a federal level then banks should be able to accept the cash right? or would they have a "right to refuse the business because we don't like it even if it's legal at the federal and the state level"?

> Create a company that can take cash in big amounts and sell cryptocurrency.

I believe this is commonly referred to as an exchange. I believe there are quite a few in existence already.

I meant physical cash in large quantities.

Oh right. I believe this is commonly referred to as organised crime.

Is it organised crime having piles of cash from otherwise legal activity?

Let's assume there is no federal vs state legality issues and instead it's just "legal". If selling X product generates large quantities of cash, is that organised crime?

I would think not, but then again I'm not a lawyer so I could be wrong. If I am wrong then yeah, the idea is definitely not sound.

If the activity is wholly legal then there isn't a problem looking for a solution: existing cash handling services will gladly do business with you.

Taking in large sums of cash and swapping it over for some cryptocurrency or another is bound to attract at least a few people who have need to launder cash. Thus, the service is likely to run afoul of Know Your Customer regulations etc etc.

As others have pointed out elsewhere in the comments, we ought, in my opinion, fully legalise and regulate the industry.

> Is it organised crime having piles of cash from otherwise legal activity?

Selling marijuana in the United States is not a legal activity. It's a federally prohibited activity that if you are really successful at it (simply by amount of money made) can be charged as a felony with a mandatory life sentence (in the no-parole federal system, where a life sentence actually means life.)

All this marijuana to crypto currency stuff is great in theory.

But at some point, you, the skinny geek with your bags of cash and bitcoins is gonna run into people who have already solved this problem and have been doing it for the past 40+ years. The drug cartels. Probably gonna be some conflict there.

Give the customers a 5% discount if they pay in Ethereum, Bitcoin Cash, Monero, ZCash, etc.

Then you'll end your day with about $9,950 in USD...

What legitimate liquidity aggregator is going to hold the counterparty risk for PotCoin/HempCoin and have banking relationships? Because once the Weed-coins are sold for BTC and given to a liquidity aggregator in jurisdictions where marijuana/hemp are illegal that becomes money laundering.

Cryptocurrencies that dodge regulations do not; their value is backed by the greater fool theory and the fact that this new retail wave aren't too familiar with AML/KYC/counterparty risk

To address your last point, a non-gubmint backed stablecoin would address that, but then again, perpetual motion devices would probably stop energy issues.

Now I kind of want to create a PotCoin/HempCoin marketed as a solution to marijuana businesses (which are rapidly growing as more states legalize so get it now while it's still cheap!) inability to use federal banks just to see how many people i could fool into buying it.

The sad thing is I bet I could make millions...

Literally none of that matters to a prosecutor. In fact, taking steps to obscure the source of funds is going to be considered a crime in and of itself.

You may not like it but KYC/AML regulations exist and are enforced.

> If that aggregation vehicle is through a privacy-focused coin like Monero or Zcash, or anything onion routed (e.g. Lightning network), how exactly do you demonstrate laundering?

You should be more concerned about how you demonstrate it's not laundering, because in more and more jurisdictions KYC (Known Your Customer) regulations in banking means you will in more and more circumstances get questions about where your money came from and potentially be asked to prove it.

This may or may not affect your jurisdiction now, but these will likely get more common as crypto spreads.

E.g. my ex bought a house recently, and part of the funds she paid the deposit with were transferred from her sister as part of her inheritance from her dad. Which created a whole circus with her lawyer, who was obligated to be certain they were not dealing with laundering, of digging up not just her statements, but dealing with requests for her sisters bank statements, and documentation of the source.

If one of those steps is effectively a tumbler, the answer may very well be "you can't prove the money is clean; we can't deal with you, and we have to report this"

No need to make any specific approach illegal even - just require that anyone you make large payments to are sufficiently satisfied the source is clean, which will be exceedingly hard for users of methods that obscure where it's from.

> Crypto solves the problem (partially) of where to store your revenue instead of a bank.

The question on everyone's lips is: in what way is storing money in a bank a problem.

Any way you slice it banks are a number of solutions. Problems not so much.

lol, crypto isn't magic. Security through obscurity is not a solution. We're trying to move away from that tor blackmarket world.

People need security through legality. This just needs to be... not illegal.

Crypto is not illegal. You just have to pay taxes on it, and exchanges might ask you to explain where the money came from.

I'm surprised nobody created a bank/exchange to take advantage of the situation.

Weed revenue is federally illegal. I think that's ridiculous, but buying crypto with that money in order to buy clean money is still considered money laundering under federal law.

That would only work if you can get the customers to pay you in the crypto coin. The retail side of the weed business is lots of small dollar transactions done in cash. Converting that to crypto requires a full scale cash-to-crypto operation that is effectively the definition of money laundering (or at least solving the same problem).

No, converting cash to crypto is NOT money laundering.

Money laundering is when you get dirty money and try to convert it into legal clean money.

I'm this case there's no dirty money, it's just banks are scared of the feds, so they refuse to take it.

They're scared of the feds because the money was the result of a violation of federal law. It's dirty money to anyone that has to deal with the feds.

Plus, would they want to wait 20+ hours for a transaction to process?

There isn't any reason why they would need to accept Bitcoin instead of a token with faster confirmation time.

Pot seems like a natural fit for the banking system that, say, microbreweries use. It's just that we have idiots like Jeff Sessions in the way.

It's hard to blame Jeff Session here... he's just enforcing the law as it is written. Congress needs to do its job.

I think its easy to blame him because he is choosing to enforce a policy that was previously not enforced.

Laws that aren't enforced should be repealed.

Selective enforcement is a recipe for tyranny.

Though I personally think that weed should be legal, I'm not going to fault Sessions here. The ball's in Congress's court.

Sessions was a Senator until recently, so, yeah, still on idiots like him.

I don't consume the stuff, by the way, but it's just been a huge win for Oregon. Millions in tax revenue, and the whole industry is now above board, cutting out any actual criminal types, freeing law enforcement resources for real crimes.

Then maybe you should be lobbying your idiot Senator to introduce a federal legalization bill, rather than complaining about laws that are on the books being enforced.

The problem with laws that "aren't enforced" is that they often do wind up being enforced. Selectively. Against anyone the government doesn't like for whatever reason.

We don't need a legalization bill. Congress has given DEA full authority to reschedule drugs, and this includes removing them from the schedule altogether. Thus, the federal status of marijuana is one executive order away by the DEA director. Or a person said director is reporting to - like, say, the Attorney General.

So, as it happens, Sessions could make this whole mess go away with a stroke of his pen. Or Trump could direct him to do so. Congress could then vote to reschedule it again, of course - but I doubt they'd dare, given the polls on the issue.

Interesting if true. I am dubious about this because I know that congress has taken action about specific drugs before (notably crack) and I would be surprised if they hadn't passed legislation requiring marijuana to be restricted. I don't know how to search for this information, though, or how I would be confident that it didn't exist without being a domain expert.

Edit: Follow-up, wikipedia has an excellent article [1] about the complexities here. Either congress or the executive could easily make medicinal marijuana legal by rescheduling, but to legalize for recreational use, they would have to amend an international treaty [2], which would require congress to act. Apparently congress has not explicitly scheduled marijuana (as it has other drugs), so the executive is free to act within the constraints of the Single Convention.

[1] https://en.wikipedia.org/wiki/Removal_of_cannabis_from_Sched...

[2] https://en.wikipedia.org/wiki/Single_Convention_on_Narcotic_...

> Congress has given DEA full authority to reschedule drugs, and this includes removing them from the schedule altogether.

Not if they are covered by a treaty commitment; in that case, the DEA can change the scheduling but must maintain a certain specified minimum restriction level.

Marijuana is a subject of treaty commitments, and therefore, while it could be moved from the spot on Schedule I where Congress put it when they passed the Controlled Substances Act to replace the Marijuana Tax Act, it cannot be removed from the set of schedules.

Of course, the President could abrogate the applicable treaty, but it's not a marijuana-specific treaty, but the core international narcotics control treaty that the US lobbied for and which is the underlying basis for pretty much all international cooperation on drug enforcement.

The US administration could also lobby for a global change to the treaty to take marijuana out, but the required consensus would be hard to secure even when the US had better international standing than it has today.

> Laws that aren't enforced should be repealed.

or ammended -

Enforcing all laws equally at all times is not possible. There will always be priorities and resource allocation.

Why cannabis prosecutions have now become a priority is not clear. The immediate impact and chilling effects are clear. What should state governments and businesses do while federal legislation is work-in-progress?

Mine support it: http://www.oregonlive.com/marijuana/index.ssf/2014/10/mariju...

Posibit is how a number of rec pot shops in WA currently accept credit cards. The gist of it is that you as an individual are buying currency from Posibit, then your currency is transfered to the account of the shop (all off-chain). The shop then sells their BTC (often the moment they receive it) back to Posibit.

Sure but doesn't this still necessitate having a bank to store the cash they sell the BTC for? Or do the pot shops store their cash in their Posabit account?

The storage of cash situation is is a weird one nobody really talks about. It's unclear to me how Posabit gets USD back to the retailer, but my understanding is the funds moving from Posabit to retailers happens as USD.

Due to the fact retailers have to move large sums of cash, and can't store it in a bank easily, they're pretty tight lipped about the situation (pot shops being robbed at the end of the night isn't unheard of).

Can't pay rent in cryptocurrency. No one is going to pay you directly in cryptocurrency so that's a problem. No cryptocurrency is stable enough to allow for ordinary small business levels of operating margins. It sounds pretty terrible actually.

What value does a cryptocurrency bring that cash does not?