President’s Economic Report Blasts Crypto For Having No Fundamental Value | CPT PPP Coverage

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The war on crypto just intensified to the dismay of trade associations and lobbyists trying to educate lawmakers on the benefits of blockchain technology. This year’s Economic Report of the President, an annual publication by the Council of Economic Advisers, just revealed an in-depth analysis of the state of the U.S. economy, along with policy recommendations for addressing economic challenges — including crypto.

What the Report Says

The chapter begins by outlining the basics of digital assets, which are digital representations of value that can be transferred, stored, and traded electronically. Digital assets can take many forms, including cryptocurrencies, stablecoins, and non-fungible tokens, and are often based on blockchain technology.

While there were a few positive statements, there were more negative. “In addition to the decentralized custody and control of money, it has been argued that crypto assets may provide other benefits, such as improving payment systems, increasing financial inclusion, and creating mechanisms for the distribution of intellectual property and financial value that bypass intermediaries,” the authors wrote. “So far, crypto assets have brought none of these benefits.”

The report goes on to lament that the “costs of crypto, meanwhile, have adversely impacted consumers, the financial system, and even the physical environment.”

Scathingly, the report’s authors added that crypto assets, to date, “do not appear to offer investments with any fundamental value, nor do they act as an effective alternative to fiat money, improve financial inclusion, or make payments more efficient.”

Next, the authors accused cryptocurrency creators of “creating artificial scarcity in order to support crypto assets’ prices.” On the other hand, the same chapter also notes that regulators must strike a balance between protecting consumers and fostering innovation in the digital asset space.

Impact on Regulation

The report did not indicate that any immediate action be taken. However, regulators don’t need a starting gun. Some such as the Securities and Exchange Commission are already in full force on actions, having delivered a Wells notice to Coinbase the very next day.

Building Web3

The report focuses almost exclusively on crypto as a replacement for fiat currency. That is a strawman argument so it can be knocked down easily. Crypto is about much more than money. It is a better way to engage with the internet (of value). There is only one paragraph on Web3, which misses the point about real world use cases being built.

What Happens Next

The report’s crypto chapter concludes by outlining several policy recommendations for promoting innovation and stability in digital asset markets. These include providing regulatory clarity and certainty, promoting transparency and disclosure, and leveraging technology to enhance regulatory oversight. It remains to be seen what actions actually happen that align.