White House Takes Aim At Crypto In Economic Report

Key Points:

• The White House has released its annual economic report, which includes a chapter on digital assets.
• White House report also mentions that forthcoming systems like the real-time payment FedNow network “could bring significant benefits to vulnerable segments of the populations.”
• Despite listing out these concerns, the report did not delve deeply into recommendations for future regulations or Congressional actions that could address the stated risks.

The White House has released its annual economic report, which includes a chapter on digital assets. The report argues that the cryptocurrency industry is creating issues for consumers, the financial system, and the environment.

The report took aim at various claims and stated goals from the crypto industry, ranging from cryptocurrencies’ role as investment vehicles and payment tools to its potential use in payment infrastructure. The report claims that “many of them do not have a fundamental value” and notes other issues with the sector.

Furthermore, the report cites various disasters in the crypto sector, including last year’s TerraUSD collapse, BitConnect and FTX, as examples of how everyday Americans were harmed. The report argues that cryptocurrencies have a history of causing harm to investors and the general public. The report makes it clear that various aspects of the digital asset ecosystem are creating issues for consumers, the financial system, and the environment.

The White House report also mentions that forthcoming systems like the real-time payment FedNow network “could bring significant benefits to vulnerable segments of the populations.” The report suggests that near-instant digital payment systems like FedNow may reduce the need for circulating digital money, and in this case, the benefits of circulating digital money after FedNow is launched may be minimal. The report notes that the Federal Reserve governor Michelle Bowman commented in August 2022 that ‘I expect that FedNow addresses the issues that some have raised about the need for a CBDC.’

Despite listing these concerns, the report did not delve deeply into recommendations for future regulations or Congressional actions that could address the stated risks. The section’s conclusion acknowledged that the underlying distributed ledger technology “may still find productive uses in the future” for both government entities and private companies. The report acknowledges that “some crypto assets appear to be here to stay,” though it goes on to note that “they continue to cause risks for financial markets, investors, and consumers.”

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