White House Report Changes Crypto Attitude

It increasingly looks like the Fed is trying to put the crypto sector to bed.

This, as one new report Authored by the White House Council of Economic Advisers, an entire 35-page chapter is devoted to explaining why blockchain-based digital asset use cases have not lived up to their promises, and broadly outlines the various risks they pose to both consumers and the US economy. system.

The picture painted is dim, and industry observers believe it could signal a shift in the Biden administration’s approach to the crypto sector from neutral to negative.

“Crypto-assets to date 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; instead, their innovation has mainly been about to create artificial scarcity to support the prices of cryptoassets – many of which have no fundamental value,” The White House report informed.

read more: Things are getting real, but not very good, for Crypto

The role of regulation in protecting consumers, investors and the financial system

“One of the main areas where there is mass default is the disclosure of crypto-assets that are securities,” The White House alleged. “This lack of disclosure prevents investors from realizing that most cryptoassets have no fundamental value.”

As reported by PYMNTS Coinbase on Wednesday (March 22) received a Wells notice from the US Securities and Exchange Commission (SEC) related to Coinbase’s list of potential unregistered securities across its suite of digital asset products and services.

It is the second Wells notice issued to a US crypto firm this year, with the SEC as well directed at the Paxos Trust last month.

Both Coinbase and Paxos later discontinued certain crypto products under investigation – with Paxos ceasing to issue the Binance-branded BUSD stablecoins and Coinbase retire at least one of its effort reward products.

“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 White House said, but what observers have honed in on is that both Coinbase and Paxos are already regulated by public agencies.

Coinbase is a publicly traded company, meaning that the SEC reviewed and approved its crypto business prior to its initial public offering (IPO). Coinbase CEO Brian Armstrong hair repeatedly insisted that Coinbase’s products are not securities and that the business does not violate any securities laws.

“The SEC has simply not been fair, reasonable or even shown a serious purpose in its involvement in digital assets,” Armstrong tweeted in response to the Wells notice.

Paxos Trust, in turn, was among the first companies approved and regulated to offer crypto products and services in the United States, doing business as a New York State-chartered trust company regulated by the New York State Department of Financial Services (NYDFS). It is one of the most comprehensively regulated crypto platforms globally.

That two of America’s most relatively wealthy firms are facing increasing SEC scrutiny does not bode well for other crypto companies hoping to operate in compliance with US requirements

Will FedNow be a crypto killer?

In the past decade, payments in cash and checks have declined dramatically while digital payments have increased noticeably, and the crypto sector was able to leverage this ongoing transformation of the landscape to gain global market share.

The White House report believes that despite tapping into the emerging environment, crypto has so far failed to provide any real value in it.

“The growth of cryptoassets has revealed a demand for a faster and more inclusive financial system with a real-time payment system and circulating digital money … This vision has not been realized,” the paper said.

Rather, the US government believes the Federal Reserve is coming FedNow real-time rail will advocate delivering on crypto’s failed promises, saying that “the benefits of circulating digital money after FedNow is launched may be minimal.”

The paper adds that FedNow, which will now be launched in Julycan “help bring America’s financial infrastructure into the digital era in a clear and simple way.”

As US-based crypto firms are increasingly looking to establish business abroadthe future of the digital asset industry in America looks increasingly unclear.