By Bill Alpert
As the U.S. House of Representatives spent Saturday considering emergency aid for Ukraine and Israel, its next must-pass law might carry two offbeat riders: cryptocurrency and cannabis.
The Federal Aviation Administration must be reauthorized by law before May 10. Last week, U.S. senators discussed additions to that legislative vehicle that would regulate stablecoins -- cryptocurrencies tied to the dollar -- and allow state-licensed cannabis operations to use the federal banking system.
Cryptocurrencies like Bitcoin have risen 50% this year as people pour cash into crypto exchange-traded funds, while the AdvisorShares Pure US Cannabis ETF has jumped 25% with the expectation that the Drug Enforcement Administration will lighten the tax burden on cannabis operators by reclassifying cannabis as a less-dangerous drug.
Investors have learned to place low odds on federal action in these realms, but a note Saturday by BTIG's Isaac Boltansky said: "We believe a stablecoin/cannabis banking deal is possible, but not yet probable."
The analyst noted that Senate Banking Committee Chair Sherrod Brown (D-Ohio) said Tuesday that he was open to attaching stablecoin/cannabis bills to the FAA legislation. Brown has been wary of crypto's vulnerability to money laundering, so a bill would surely have to satisfy anti-money-laundering concerns. Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) introduced a bill Wednesday that would establish a federal regulatory regime for stablecoins.
Senate Majority Leader Chuck Schumer (D-N.Y.) discussed packaging stablecoin and cannabis deals with the FAA reauthorization, as he met with House Financial Services Committee Chairman Patrick McHenry (R-Calif.) and ranking member Maxine Waters (D-Calif).
The details of cannabis banking already have been hammered out. In September 2023, the Senate Banking Committee cleared a bill to open federally regulated banking to state-legal cannabis firms as the Secure and Fair Enforcement Regulation (SAFER) Banking Act.
Congress has a lot on its mind. It's to be determined whether these items make it in.
"Time on the congressional clock continues to tick away," wrote BTIG's Boltansky. "Negotiators are racing to craft a deal before early May."
Write to Bill Alpert at william.alpert@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 20, 2024 12:04 ET (16:04 GMT)
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