Crypto executives have expressed irritation over the latest White House economic report — which notably features an entire chapter dedicated to casting doubts on the merit of digital assets.
The Economic Report of the President, released March 20, marks the first time the White House has included a section on digital assets since it first began issuing the annual economic policy report in 1950.
Co-founder of digital asset investment firm Paradigm, Fred Ehrsam, remarked that 15% of the Economic Report was dedicated to “crypto FUD.”
— Fred Ehrsam (@FEhrsam) March 21, 2023
The report includes 35 pages dedicated to debunking the “Perceived Appeal of Crypto Assets” along with a short section on the FedNow payment system and central bank digital currencies (CBDCs).
The report’s main argument 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 has been mostly about creating artificial scarcity in order to support crypto assets’ prices—and many of them have no fundamental value.”
It also argues that cryptocurrencies fail to perform the functions of sovereign money — such as the U.S. dollar — as crypto prices fluctuate too wildly to be a stable store of value, nor can they function as a unit of account or medium of exchange.
The report also takes aim at stablecoins, which it argues are subject to run risks, and is thus too risky to satisfy their role as a “fast payment” instrument.
Blockchain Association CEO Kristin Smith called the latest presidential report “disappointing,” saying it shows that some in the government appear “increasingly allergic” to the burgeoning crypto industry, adding:
“We urge the Biden administration to consider how it will be remembered: as a leader of profound innovation or a roadblock to a global tech revolution.”
Decentralization is also highlighted in the report, which argues that “despite claims of being decentralized and trustless, blockchain-based applications are in practice neither.”
Users access crypto assets by going to a limited set of crypto asset platforms, while a small group of miners performs the majority of mining in most crypto assets, it argues.
The latest annual economic policy report was published some two weeks after the collapse of Silvergate Bank, Silicon Valley Bank, and Signature Bank — all three of which served aspects of the crypto industry.
Dan Reecer, chief growth officer at decentralized finance (DeFi) platform Acala Network, claims the report comes “just days” after Operation Chokepoint 2.0 was executed on crypto-friendly banks.
He also noted an “obvious early warning” of an upcoming United States CBDC, or digital dollar, referencing a section of the report that seemingly touts the benefits of a U.S. central bank-controlled currency.