The White House has released its Economic Report of the President, which includes a dedicated section that raises skepticism about the value and worthiness of digital assets, as stated by our sources. This is the first time since the inception of the annual economic policy report in 1950 that the White House has incorporated a section dedicated to digital assets.
The latest Economic Report of the President has criticized digital assets, arguing that they do not fulfill their stated benefits of improving payment systems, enhancing financial inclusion, and enabling the transfer of value and intellectual property. The report claims that the primary innovation behind digital assets is creating artificial scarcity to sustain their prices and that many digital assets lack any fundamental value. Moreover, the report claims that digital assets cannot perform the functions of sovereign money, such as the US dollar, because their prices are too volatile to provide a stable store of value. They are not suitable as a unit of account or medium of exchange.
Additionally, the report takes a critical stance on stablecoins, contending that they are subject to run risks and cannot satisfy their role as a “fast payment” instrument due to the high level of risk. The report also emphasizes the issue of decentralization, asserting that despite claims of being decentralized and trustless, blockchain-based applications are not genuinely decentralized or trustless in practice. It argues that users primarily access digital assets through a limited set of digital asset platforms, while a small group of miners dominates most digital assets’ mining activities.
The report’s critical stance towards digital assets has raised eyebrows among crypto executives, with some calling it “disappointing” and urging the Biden administration to consider how it will be remembered. According to them, the latest report by the government reveals that certain officials are becoming more resistant to the rapidly growing crypto industry and are hindering a global technological revolution.
The report also references a section that touts the benefits of a US central bank-controlled currency, leading some to speculate that an upcoming United States CBDC or digital dollar could be on the horizon. This has further fueled speculation about the future of digital assets in the United States.
The report was published a few weeks following the downfall of three banks: Silicon Valley Bank, Silvergate Bank, and Signature Bank, all of which provided services to the crypto industry. Some industry members have also noted an “obvious early warning” of Operation Chokepoint 2.0 being executed on crypto-friendly banks.