California legislators are backing the Assembly Bill 953 seeking to permit stablecoins for state payments including fines and taxes.
The bill introduced to the house by the California State Assembly in February is a step towards solving the cash menace at the county tax offices especially from cannabis-related businesses. However, businesses dealing in cannabis will have to use stablecoins particularly to settle their state payments.
Stablecoins are cryptos backed by a physical asset like gold, oil or a fiat currency like the dollar. This way the crypto will have significant stability, unlike other cryptos, thus making it safe for individual businesses and the state.
The Assembly Bill 953
The legislators are looking to have the bill in effect as of January 2010. An excerpt of the bill states that; “The bill would authorize that city or county in determining that method to either accept stablecoins directly into a digital wallet controlled by that jurisdiction or to utilize a third-party digital asset payment processor…”
The bill further provides that the appointed stablecoin to be used to settle state payments should be easily convertible into the United States Dollar. The state of California like several other U.S states have legalized cannabiss dealings and taxed accordingly.
Nonetheless, businesses dealing with cannabis have lagged in assessing critical banking services because most of the banking institutions operate under the Federal Deposit Insurance Corporation (FDIC) guidelines. The FDIC forbids banking institutions from serving clients dealing in ventures outlawed by the federal law.
Challenge in Collecting Cannabis Tax
Due to stringent banking regulations, cannabis operators are forced to hold on to massive loads of cash that find their way to the state tax offices for processing.
According to testimony by Fiona Ma, the California State Treasurer before the U.S House Committee on Financial Services on the process of Tax collection specifically on cannabis businesses, cannabis operators travel long distances to submit their taxes in cash which is a great inconvenience for the businesses and the state.
Back in 2017, the Dash Network fashioned Dash as a payment option for the cannabis industry. Dash aimed at saving the industry about 10-15% in cash boxes, safes, and guards expenses.
A number of US states are warming up to the idea of cryptos and stablecoins as means of state payments. The state of New Hampshire, for instance, proposed a bill to allow state payments in Bitcoins (BTC)