In a recently published report, the White House targeted cryptocurrencies and claimed that various elements of the digital asset ecosystem are causing problems for consumers, the financial system, and the environment.
An annual publication called the Economic Report of the President, which explains the economic policies and priorities of the President, was released by the Council of Economic Advisers on Monday. The March 2023 edition devoted an entire chapter to digital assets and economic principles.
Against the backdrop of mounting apprehension in the industry that federal regulators are attempting to de-bank crypto companies. While state and federal regulators have refuted these allegations thus far, the report's tone is improbable to alleviate these worries.
According to Matthew Homer, a former deputy superintendent at the New York Department of Financial Services, the report is a "harsh condemnation of the industry that clearly demonstrates their policy stance."
"The report's thorough analysis of digital assets is significant, particularly when compared to other aspects of financial services that have arguably caused more harm in recent weeks. The assessment's definitive tone and sweeping statements are noteworthy,"
The report assessed various assertions and stated objectives of the crypto industry, including cryptocurrencies' functions as investment instruments and payment methods, as well as their possible employment in payment infrastructure, stating that numerous claims lack an intrinsic worth and pointing out other concerns with the industry.
The report stated that:
"crypto assets have been claimed to offer additional advantages, such as enhancing payment systems, expanding financial inclusion, and creating methods for dispensing intellectual property and financial value that avoid intermediaries that extract value from both the supplier and the receiver. Nonetheless, a closer look at these assertions reveals a more intricate situation. Thus far, crypto assets have not provided any of these advantages."
It also cited several crypto industry catastrophes, such as the TerraUSD collapse, BitConnect, and FTX from last year, as illustrations of how ordinary Americans were adversely impacted. It also provided examples of more sophisticated scams, such as Long Island Iced Tea's decision to change its name to Long Blockchain to profit from a stock price surge despite having no connection to blockchain technology at the time. Furthermore, the report noted Signal creator Moxie Marlinspike argues that a centralized internet is more straightforward.
It also highlighted that upcoming systems like the real-time payment FedNow network might offer substantial advantages to susceptible portions of the community.
the report stated:
"Certain individuals have proposed that prompt digital payment system like FedNow might decrease the demand for circulating digital currency,"
The report outlined these concerns but refrained from delving deeply into recommendations for future regulations or congressional actions to address the stated risks.
In conclusion, the section recognized that the underlying distributed ledger technology may still have constructive applications in the future for both government and private organizations. The report also acknowledged that some crypto assets appear to have staying power, but added that they continue to pose risks for financial markets, investors, and consumers.
the report said, pointing to the Securities and Exchange Commission:
"Existing regulations cover much of the activity in the crypto asset sector, and regulators are broadening their capabilities to bring a large number of new entities into compliance. Other segments of the crypto asset sector require collaboration among various agencies and discussions about how to address the hazards they pose,"