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- Citing the 2022 bear market, which obliterated over $2.2 trillion, the White House report called crypto assets an unstable store of value with predatory tokenomics.
- Cryptocurrencies have been described as instrumental in fighting rising inflation amid increased bank runs all over the world.
In a bid to educate regulators on the role of digital assets in the economic expansion of the United States dollar, the White House under President Joe Biden in its annual economic report highlighted key findings on the nascent blockchain technology.
White House View on Crypto Assets
According to the White House, some crypto assets including Bitcoin are here to stay but are mostly speculative in nature. As such, the report noted that crypto assets pose a significant risk as the opportunity to disrupt existing business models.
Nonetheless, the report disputed the claim that crypto assets can challenge basic economic principles, such as what makes an asset effective as money. According to the report, most crypto assets are either unregulated securities, a commodity, a derivative, or another type of financial product depending on the underlying fundamentals.
Although the underlying technologies are a clever solution for the problem of how to execute transactions without a trusted authority, crypto assets currently do not offer widespread economic benefits. They are largely speculative investment vehicles and are not an effective alternative to fiat currency. Also, they are too risky at present to function as payment instruments or to expand financial inclusion.
The Whitehouse annual economic report to Congress noted.
Citing the 2022 bear market, which obliterated over $2.2 trillion, the White House report called crypto assets an unstable store of value with predatory tokenomics.
The White House’s annual economic report to Congress casts sweeping doubts on the merits of crypto assets, including that crypto assets are neither effective stores of value nor effective means of payment; their innovations are primarily about creating https://t.co/1U25lB0EZD… pic.twitter.com/7Mi3rt96IX
— Wu Blockchain (@WuBlockchain) March 22, 2023
As such, the report classified crypto assets under digital assets that tap into the central bank’s digital currency. Moreover, cryptocurrencies have been described as instrumental in fighting rising inflation amid increased bank runs all over the world.
Bigger Picture
The White House annual economic report has coincided with the third Federal FOMC statement on interest rates. With the Fed forecasted to increase the interest rate by 25 bps, crypto assets led by Bitcoin are expected to rally in the coming days. Moreover, the Fed has indicated plans to print more money to save the banking industry.
As such, institutional investors and retail traders are fleeing risky assets like Bitcoin as a store of value.
Meanwhile, the United States policymakers have been called to act neutral on emerging technologies to avoid choosing the winners and the losers. Moreover, the role of governments is to facilitate a fair business environment without choosing which technologies will win over the others.
Too many policymakers are playing venture capitalist, guessing which technologies will be valuable and which won't.
Tech neutrality is a core principle of good policy for a reason. Picking winners and losers is hard enough for the professionals. Government should stay out of it.
— Jake Chervinsky (@jchervinsky) March 22, 2023
Reportedly, the biggest challenge crypto companies are facing in the United States is the lack of clear regulations. As such, crypto-related companies in the United States have begun diversifying into other crypto-friendlier nations like Dubai.
