The US government, in this case the White House issues a report from which a very bad picture comes out for crypto assets.
Just as some judgments might seem clockwork, the recent White House report on the crypto world is a bucket of ice water toward a sector that was appreciating.
The crisis in the US banking system that has persisted for 10 days now, and that knows no rest despite relevant measures taken by the Fed and the government, have sent Bitcoin and many altcoins soaring.
Bitcoin and with it many crypto assets were born precisely as an alternative to the classical financial world and despite some flaws at this stage have been very attractive to investors.
The White House saw crypto assets as a threat to the status quo of finance, and the report prepared by the Council of Economic Advisers came out with enviable timing.
The White House report on the crypto world
According to the report, the crypto system shows major flaws and harbors dangers for investors.
Experts, in the document, believe that there are more risks than benefits in addition to being a much less green world than it wants to appear.
The paper, which came out two days ago, is annual and sheds light on the Oval Office’s economic priorities and policies, and this time it contained a focus on cryptocurrencies.
There is a growing feeling in the crypto world that a new witch hunt is underway just as it did during the Inquisition period.
Legislative bodies and the government obviously deny this accusation, but the tension between government and regulators toward crypto remains.
The former deputy superintendent of the New York Department of Financial Services, Matthew Homer, commented as follows:
“a damning indictment against space that makes their political stance crystal clear.
The amount of attention being paid to digital assets is substantial, especially when compared to other areas of financial services that have arguably been much more damaging in recent weeks. The evaluation impresses with its definitive tone and broad brushstrokes.”
The stated goals of the crypto world and the anti-system vocation of some of them also ended up under the magnifying glass of the government task force that drafted the report.
This document explained that in addition to showing the side of great risks, cryptocurrencies lack concrete value and show flaws from a technical point of view.
“It has been argued that crypto assets can provide other benefits, such as improving payment systems, increasing financial inclusion, and creating mechanisms for distributing intellectual property and financial value that bypass middlemen who extract value both from the provider and the recipient.
Looking under the hood at these arguments, however, shows a more complicated picture. So far, cryptocurrencies have brought none of these benefits.”
The official document reads.
The annus horribili of 2022 contributed with the numerous failures of the crypto industry to endorse the government’s idea.
The Terra Luna case, FTX, Three Arrows Capital, etc. have played into the speculative action of the White House, which wants to put the entire industry in a bad light.
The ploy used by Long Island Iced Tea that changed its name to Long Blockchain to exploit a trend and appreciate in the market are a minor example of how sly the crypto world is.
“Some have suggested that near-instant digital payment systems like FedNow could reduce the need to circulate digital cash. In this case, the benefits of circulating digital cash after the launch of FedNow could be minimal.
In fact, the Federal Governor Reserve Michelle Bowman commented in August 2022 that ‘my expectation is that FedNow addresses the issues some have raised about the need for a CBDC’.”
However, the report acknowledges that the cryptographic system that is based on the idea of a distributed ledger and blockchain technology could be useful for the future.
The utility is real and as the official document states:
“Some crypto assets appear to be here to stay, however, they continue to pose risks to financial markets, investors and consumers.
Much of the activity in the cryptocurrency space is covered by existing regulations, and regulators are expanding their capabilities to bring a large number of new entities into compliance. Other parts of the crypto asset space require coordination of various agencies and deliberations on how to address the risks they pose.”