The White House takes aim at crypto in a scathing economic report

The White House took aim at cryptocurrencies in a new report that argued that many aspects of the digital asset ecosystem create problems for consumers, the financial system and the environment.

The report looked at a range of claims and stated goals by the crypto industry, ranging from cryptocurrencies’ role as investment vehicles and payment tools to potential use in payment infrastructure, saying “many of them lack a fundamental value” and noting other problems with the sector.

“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 economic value that bypass middlemen who extract value from both the provider and the recipient. Look under the hood of these arguments however, presents a more complicated picture. So far, cryptoassets have not delivered any of these benefits,” the report said.

Various disasters in the crypto sector, including last year’s TerraUSD collapse, BitConnect and FTX, were cited as examples of how everyday Americans were harmed.

Other examples pointed to more subtle scams, such as Long Island Iced Tea changing its name to Long Blockchain to ride a stock price wave despite having nothing to do with blockchain at the time.

The report also took a minute to say that a centralized internet is easier, cites Signal creator Moxie Marlinspike.

It also mentioned that upcoming systems like the FedNow real-time payment network “could provide significant benefits to vulnerable segments of the population.”

“Some have suggested that near-instant digital payment systems like FedNow could reduce the need to circulate digital money,” the report said. “In this case, the benefits of circulating digital money after FedNow is launched may be minimal. In fact, Federal Reserve Chair Michelle Bowman commented in August 2022 that “my expectation is that FedNow will address the issues that some have raised about the need for a CBDC .'”

Despite listing these concerns, the report did not delve deeply into recommendations for future regulations or congressional actions that might address the stated risks.

The section’s conclusion acknowledged that the underlying distributed ledger technology “may still find productive uses in the future” for both public entities and private companies.

The report also acknowledged that “some cryptoassets appear to be here to stay,” though it went on to note that “they continue to pose risks to financial markets, investors and consumers.”

“Much of the activity in the cryptoasset space is covered by existing regulations and regulators are expanding their scope to bring a large number of new entities under compliance,” the report said, pointing to the Securities and Exchange Commission. “Other parts of the cryptoasset space require the coordination of various agencies and considerations of how to manage the risks they pose.”

Matthew Homer, a former deputy director of the New York Department of Financial Services, told CoinDesk that the report was a “damning indictment of the space that makes their political position crystal clear.”

“The amount of attention given to digital assets is significant, especially compared to other areas of financial services which have arguably been far more damaging in recent weeks. The assessment is striking in its definitive tone and broad brushstrokes.” he said.