‘Crypto FUD’ — Industry outraged as White House report slams crypto
Crypto executives have expressed annoyance at the latest economic report from the White House – which notably includes an entire chapter dedicated to casting doubt on the value 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 the investment company Paradigm for digital assets, Fred Ehrsam, noted that 15% of the financial report was dedicated to “crypto R&D.”
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 cryptoassets are failing to deliver on their “touted” benefits, such as improving payment systems, financial inclusion and creating mechanisms to transfer value and intellectual property, saying:
“Instead, their innovation has been mainly about creating artificial scarcity to support the prices of crypto-assets – many of which have no fundamental value.”
It also argues that cryptocurrencies fail to perform the functions of sovereign money – such as the US dollar – as crypto prices fluctuate too much to be a stable store of value, nor can they act as a unit of account or medium of exchange.
The report also takes aim at stablecoins, which it claims are exposed to risk, and are thus too risky to satisfy their role as a “quick payment” instrument.
Blockchain Association CEO Kristin Smith called the latest presidential report “disappointing,” saying it shows some in government seem “increasingly allergic” to the burgeoning crypto industry, adding:
“We urge the Biden administration to consider how it will be remembered: as a leader of deep innovation or a roadblock to a global technology revolution.”
Decentralization is also highlighted in the report, which claims that “despite claims to be decentralized and trustless, in practice blockchain-based applications are neither.”
Users gain access to cryptoassets by going to a limited set of cryptoasset platforms, while a small group of miners do most of the mining in most cryptoassets, it is claimed.
Related: House Republicans are directly criticizing the Biden administration for digital asset policies
The latest annual economic policy report was published about 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, head of growth at decentralized finance (DeFi) platform Acala Network, claims the report comes “just days” after Operation Chokepoint 2.0 was carried out on crypto-friendly banks.
He also noted an “obvious early warning” about a coming US CBDC, or digital dollar, citing a section of the report that apparently touts the benefits of a US central bank-controlled currency.
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