- The 2023 Economic Report of the President criticizes cryptocurrencies and their value.
- The report claims that crypto assets fail to deliver on promises of innovation and financial inclusion.
- White House suggests crypto advocates should relearn basic economic principles.
The White House has released its annual Economic Report, which features a critical examination of cryptocurrencies and their purported benefits. According to the report, many digital assets lack fundamental value and their designs display an ignorance of basic economic principles .
The 2023 Economic Report of the President, a 513-page document, includes several sections that address digital markets and technology. Chapter 8, titled “Digital Assets: Relearning Economic Principles,” questions the value of cryptocurrencies and suggests that crypto advocates need to return to the basics of economics .
The report disputes the idea that cryptocurrencies can serve as investment vehicles, function like money without a central authority, enable fast digital payments, and increase financial inclusion for the unbanked and underbanked. Instead, it argues that digital assets have mostly focused on creating artificial scarcity to support their prices .
Regarding the blockchain technology that underpins cryptocurrencies, the report states that it has “fueled the rise of financially innovative digital assets that have proven to be highly volatile and subject to fraud” . The authors of the report believe that crypto assets have not improved payment systems or increased financial inclusion, as their proponents claim. Instead, the costs of cryptocurrencies have had negative effects on consumers, the financial system, and even the environment .
The White House report also highlights issues with the lack of regulation and enforcement surrounding cryptocurrencies. It states that one of the primary areas of noncompliance is in the disclosure of crypto assets that are securities, which prevents investors from recognizing that many of these assets have no fundamental value .
In a section discussing Web3, the so-called new Internet, the report cites Signal app founder Moxie Marlinspike and argues that some centralization is inevitable. It concludes that a distributed ecosystem that centralizes around a platform for convenience ends up being the worst of both worlds: centralized control but still distributed enough to become mired in time .
The critical tone of the 2023 Economic Report of the President toward cryptocurrencies and their potential benefits reflects the growing concern among governments and regulatory bodies about the impact of digital assets on the global financial system.
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