Cryptocurrency executives expressed anger over the latest White House economic report which in particular devoted an entire chapter to questioning the value of digital assets.
The President’s Economic Report, released on March 20, marks the first time the White House has included digital assets since its first annual economic policy report in 1950. According to Fred Ehrsam, co-founder of digital asset investment firm Paradigm, 15% of economic reports are devoted to “crypto FUD.” The report includes 35 pages devoted to debunking the “perceived appeal of crypto assets,” as well as a small section on the FedNow payment system and central bank digital currencies.
The report’s main thesis is that crypto assets fail to deliver on their “touted” benefits, such as improving payment systems, financial inclusion, and creating mechanisms to transfer value and intellectual property, stating:
“Instead, their innovation is primarily about creating artificial scarcity to support the prices of crypto assets many of which have no fundamental value.”
It also argues that cryptocurrencies cannot function as sovereign currencies, such as the U.S. dollar, because their prices fluctuate too much to be stable stores of value, units of account or mediums of exchange. The report also targets stablecoins, arguing that they are risky to operate and therefore too risky to fulfill their role as a “fast payment” tool.
Blockchain Association CEO Kristen Smith called the latest presidential report "disappointing," saying it showed some in the administration appeared to be "increasingly allergic" to the nascent crypto industry, adding:
"We urge the Biden administration to consider how it will be remembered: as a leader in profound innovation or as an obstacle to a global tech revolution." Decentralization was also highlighted in the report, arguing that "despite claiming to be decentralized and trustless, blockchain-based applications are neither."
It argues that users access crypto assets by accessing a limited set of crypto asset platforms, while a small group of miners conduct the majority of mining in most crypto assets. The latest annual economic policy report comes about two weeks after the collapse of Silvergate, Silicon Valley and Signature banks all three banks that have served various aspects of the crypto industry.
Dan Reecer, chief growth officer at decentralized finance platform Acala Network, claimed that the report comes “a few days” after Operation Chokepoint 2.0 was executed on the crypto-friendly bank.
