Yesterday, the Obama administration announced new guidelines allowing the banking industry to do business with legal marijuana sellers. While this is clearly a game changing moment for the mainstream financial sector, the implications for the growing Bitcoin market will also be significant.
To understand why, it’s worth remembering that Bitcoin first entered the mainstream consciousness in 2011 as the method of exchange on the black market thanks to a profile on the original Silk Road marketplace. As a result, many startups seeking to make Bitcoin seem more “legitimate,” such as Coinbase and BitPay, refused to work with any entity associated with even the increasingly legal (on the state level, at least) medical marijuana trade. (CoinBase is currently revisiting their policy following yesterday’s announcement.)
That’s not to say that legal marijuana vendors didn’t use Bitcoin. Barred from using the banking or credit system by federal rules, the unregulated nature Bitcoin allowed a means for those merchants to store and exchange funds. It’s not known exactly how large of a role the legal marijuana industry played in the Bitcoin boom of the last six months, but it’s clear from the number of such vendors that accept Bitcoin that it wasn’t an insignificant amount.
Now that legal marijuana vendors aren’t barred from using the banking system, what will the impact be on Bitcoin?
CoinDesk’s Pete Rizzo posted an excellent overview of the topic yesterday. His conclusion?
Should banks and traditional financial services providers move to develop a presence in this industry, bitcoin would likely lose an early mover advantage to a burgeoning market.