White House Economic Report Criticizes Cryptocurrency

Cryptocurrency's Unrealized Promises

The Economic Report of the President, released by the White House Council of Economic Advisers, dedicates over 30 pages to scrutinizing crypto assets. The report highlights that the anticipated benefits of cryptocurrencies, such as improved payment systems and increased financial inclusion, have yet to materialize.

Lack of Fundamental Value

The report criticizes crypto assets, stating they lack fundamental value and do not effectively replace fiat currencies. Instead, it suggests that their primary innovation is creating artificial scarcity to inflate prices. This perspective challenges the notion that cryptocurrencies are a sound investment alternative.

Risks Associated with DeFi

Decentralized Finance (DeFi) platforms are identified as posing significant risks to investors. The report notes these platforms often operate like unregulated financial institutions, engaging in activities without adhering to necessary regulations. The Council urges that DeFi platforms comply with all applicable financial laws to protect investors.

Ignorance of Economic Principles

The Council harshly criticizes crypto asset advocates for disregarding basic economic principles. It argues that the design of many digital assets reflects a lack of understanding of long-established economic and financial concepts, which can lead to consumer and investor detriment.

Call for Regulation

The report underscores the urgent need for effective regulation in the crypto asset sector. While acknowledging the potential of crypto technology, it emphasizes that the current issues overshadow its advantages. Additionally, the report suggests that a U.S. Central Bank Digital Currency (CBDC) could modernize the financial system without the risks associated with cryptocurrencies.