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White House Economic Report Addresses Crypto Assets

The White House Council of Economic Advisers published the President's Economic Report on March 20, which dedicates over 30 pages to discussing crypto assets. The report highlights the flaws and problems associated with cryptocurrencies, emphasizing the need for regulation.

White House
White House

Cryptocurrencies Fail to Deliver Promised Benefits

The Economic Report notes that the benefits promised by cryptocurrencies, such as improved payment systems and increased financial inclusion, have yet to materialize. The report states, "So far, crypto assets have brought none of these benefits."

Crypto Assets Criticized as Investments

The report criticizes crypto assets as investments, asserting they don't have a fundamental value, serve as a substitute for fiat currency, increase financial inclusion, or improve payment efficiency. The report claims that crypto innovation primarily creates artificial scarcity to support asset prices.

Defi Risks and Regulatory Compliance Issues

The Economic Report highlights the serious risks that decentralized finance (DeFi) poses to investors, particularly the use of significant leverage and the performance of regulated functions without compliance with appropriate regulations. The report suggests DeFi platforms should adhere to all applicable laws and regulations.

Representative DEFI image
Representative DEFI image

Crypto Advocates Accused of Ignoring Economic Principles

The White House Council of Economic Advisers accuses some crypto asset supporters of being ignorant of fundamental economic principles. The report states that the design of these assets often reflects this ignorance, which can be detrimental to consumers and investors.

Emphasis on Effective Regulation in Crypto Space

The Economic Report underscores the need for effective regulation within the crypto asset space, acknowledging the potential of crypto assets and their underlying technology but asserting that there are more issues than advantages currently.

U.S. CBDC as a Safer Alternative

The report discusses the potential of a U.S. Central Bank Digital Currency (CBDC) to modernize the country's financial system without the dangers or irrational exuberance associated with crypto assets.