"Crypto FUD" Angers The Industry As A White House Report Criticizes Cryptocurrency

The most recent White House economic report, which noticeably has an entire chapter dedicated to raising concerns about the value of digital currencies, has angered cryptocurrency executives.

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Since the start of the annual economic report in 1950, the White House has not included a section on digital assets in the Economic Report of the President, which was published on March 20.

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15% of the Economic Report, according to Fred Ehrsam, co-founder of the investing company Paradigm, was devoted to "crypto FUD."

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The "Perceived Attraction of Crypto Assets" is debunked in 35 pages of the paper, along with a brief section on the FedNow payment service and central bank electronic currencies.

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The report's principal contention is that cryptoassets fall short of achieving their "touted" objectives, such as enhancing payment systems, promoting financial inclusion, and developing platforms to transfer wealth and proprietary information, as stated in the following quote:

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Instead, they have mostly focused on creating a false sense of scarcity to boost the pricing of crypto assets, many of which have no real intrinsic worth.

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It further claims that because cryptocurrency prices fluctuate too greatly to serve as a stable store of value or a unit of account, they cannot fulfill the tasks of sovereign money, such as the U.S. dollar.

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The research also criticizes stablecoins, claiming they are too dangerous to fulfill their function as a "rapid payment" instrument since they are vulnerable to run risks.

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CEO of the Blockchain Association Kristin Smith referred to the most recent presidential report as "disappointing," adding that it demonstrates how some government officials appear to be "increasingly allergic" to the booming crypto sector.

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"We implore the Biden administration to think carefully about how it wants to be remembered—as a pioneer of significant innovation or as a barrier to a global tech revolution."

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The research also emphasizes decentralization, contending that "despite claims of being distributed and trustless, blockchain-based systems are in practice neither" (p. 2).

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It claims that only a small number of crypto asset systems are used by users to access crypto assets, and that most crypto assets are mined primarily by a small number of miners.

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Related: House Republicans blast Biden administration's handling of digital assets

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Just two weeks after the failures of the Silvergate, Silicon Valley, and Signature banks—all three of which had provided services to the cryptocurrency industry—the most recent annual economic report was released.

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The report, according to Dan Reecer, chief growth manager at decentralised financial platform Acala Network, came "only days" after Operation Chokepoint 2.0 was carried out on cryptocurrency-friendly banks.

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He also mentioned a "evident early warning" of an impending digital dollar, or CBDC, in the United States, referring to a passage in the report that appears to promote the advantages of a central bank-controlled currency in the United States.

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