The president’s economic report blasts crypto for having no fundamental value
Biden administration active on crypto
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The war on crypto just intensified to the dismay of industry associations and lobbyists trying to educate themselves on benefits. The Economic Report of the President is an annual publication by the Council of Economic Advisers that just published an in-depth analysis of the state of the US economy, along with policy recommendations to address economic challenges – including crypto.
What the report says
The chapter begins by outlining the basics of digital assets, which are digital representations of value that can be transferred, stored and traded electronically. Digital assets can take many forms, including cryptocurrencies, stablecoins and non-fungible tokens (NFTs), and are often based on blockchain technology.
Although there were a few positive statements, there were several negative ones. “In addition to decentralized custody and control of money, it has been argued that cryptoassets can provide other benefits, such as improving payment systems, increasing financial inclusion, and creating mechanisms for the distribution of intellectual property and financial value that bypass intermediaries,” the authors wrote. “Crypto-assets so far have not provided any of these benefits. The cost of crypto, meanwhile, has adversely affected consumers, the financial system and even the physical environment. Indeed, to date, crypto-assets do not appear to offer investments of any fundamental value . , nor do they act as an effective alternative to fiat money, improve financial inclusion, or make payments more efficient,” the authors wrote. “Instead, their innovation has mainly been about creating artificial scarcity to support crypto asset prices.”
Impact on regulation
The report did not indicate that any immediate measures should be taken. The chapter notes that regulators must strike a balance between protecting consumers and promoting innovation in the digital asset space. Regulators do not require a starting gun. Some like the SEC are already in full force on actions, having delivered a Wells notice to Coinbase the very next day.
Building web 3
The report focuses almost exclusively on crypto as a substitute for fiat currency. It’s a straw man argument, so it can be easily shot down. Crypto is about much more than money. It’s a better way to engage with the internet (of value). There is only one paragraph on Web 3, which misses the point about real-world use cases being built.
What happens afterwards
The chapter concludes by outlining several policy recommendations to promote innovation and stability in digital asset markets. These include providing regulatory clarity and certainty, promoting transparency and disclosure, and leveraging technology to improve regulatory oversight. It remains to be seen which actions actually occur that match.
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