White House Onto Cryptocurrencies With Latest Economic Report

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In a new report, the White House has claimed that several aspects of the cryptocurrency ecosystem are creating issues for consumers, the financial system and the environment.

Economic Report of the President Scrutinizes Cryptocurrencies

The report released on Monday aimed at cryptocurrencies, and is centred around explaining the economic priorities and policies of the president. It is part of an annual publication of the Council of Economic Advisors and included a whole chapter on digital assets and “economic concepts” in the March 2023 issue.

The report that came out on Monday has increased worries in the crypto industry that government regulators may take away the banking rights of crypto companies. Even though state and federal regulators have denied this, the report’s tone is unlikely to calm these concerns.

The report was also cited to be a “damning indictment of the space that makes the administration’s policy position crystal clear.” by Matthew Homer, a former deputy superintendent with the New York Department of Financial Services

He further added that “The amount of attention given to digital assets is substantial, especially when viewed in comparison to other areas of financial services that have arguably been far more detrimental over the past few weeks. The assessment is striking in its definitive tone and broad brush strokes,”

Multiple factors, such as claims and goals made by the crypto industry were taken into account to create the report. This included the role of cryptocurrencies as investment devices and payment tools and their potential integration into the financial infrastructure. The report cited a multitude of issues with the cryptocurrency sector and said that many cryptocurrencies do not have a fundamental value.

“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 that extract value from both the provider and recipient. Looking under the hood at these arguments, however, shows a more complicated picture. So far, crypto assets have brought none of these benefits”, the Economic report of the President further went on to add-

Investors At Risk Although Some Aspects Of Cryptocurrencies Remain Lucrative

Americans are thought to be at risk with their involvement in the sector, and disasters in the industry such as the collapse of Terra, BitConnect and FTX are typical examples of the uncertainty in the sector. The report also pointed out other examples, such as Long Island Iced Tea changing its name to Long Blockchain to spike the token’s price, even though the name change had no significance to the blockchain whatsoever.

The report referenced Signal creator Moxie Marlinspike and suggested that a centralized internet would be simpler, while also noting that upcoming systems such as the FedNow network for real-time payments could have notable advantages for vulnerable segments of the population.

“Some have suggested that near-instant digital payment systems like FedNow may reduce the need for circulating digital money,” the report said. “In this case, the benefits of circulating digital money after FedNow is launched may be minimal. In fact, Federal Reserve Governor Michelle Bowman commented in August 2022 that ‘my expectation is that FedNow addresses the issues that some have raised about the need for a central bank digital currency.'”

The report also pointed to the Securities and Exchange Commission saying, “Much of the activity in the crypto asset space is covered by existing regulations and regulators are expanding their capabilities to bring a large number of new entities under compliance,” “Other parts of the crypto asset space require coordination by various agencies and deliberations about how to address the risks they pose.”

While a lot of concerns regarding the industry were mentioned, there was little to no mention of future regulations or actions by the regulatory body that could address the risks discussed. While the sector presents many risks, the report did acknowledge the future use case of blockchain technology for government and private entities.

The report concluded by acknowledging the significance and benefits of some crypto assets saying that they are “here to stay. While noting that “they continue to cause risks for financial markets, investors and consumers.”

Congress to Question SEC Chief’s Crypto Policy

The United States Securities and Exchange Commission (SEC) chairman, Gary Gensler, is scheduled to testify before the House Financial Services Committee on April 18th. This will be his first appearance before the committee, and he will be answering questions on his approach to the crypto ecosystem.

The House Financial Services Committee is responsible for overseeing all aspects of the U.S. financial services industry, including banking, securities, and digital assets. Chairman of the committee, Representative Patrick McHenry, confirmed in an interview that the hearing would focus on Gensler’s rulemaking and approach toward crypto assets. He emphasized that the committee would take a serious approach to “laying down a regulatory sphere for digital assets.”

Gensler’s stance on crypto has been a topic of concern for many Democratic party members. The crypto industry believes that the party’s anti-crypto stance could be detrimental to its 2024 election campaign. Many pro-crypto and pro-Bitcoin Democrats are lining up to voice their opposition to the party’s stance.

Regulators in the U.S. have taken a hard stance on crypto in the first few months of 2023. The SEC has issued Wells notices to several crypto firms, including Coinbase, while the Commodity Futures Trading Commission has filed a lawsuit against Binance. However, the crypto community has emphasized that regulations should be decided by Congress, not individual agencies.

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