On Monday, the Biden administration’s economic report was released and it focused on several topics, including cryptocurrency and decentralized finance (defi). The report states that crypto assets are “mostly speculative investment vehicles” that are not backed by anything and are traded without fundamental anchors. The report further argues that crypto assets do not deliver on their promises and fail to serve as effective units of account.
The report also highlights the risks associated with stablecoins and their potential to disrupt financial stability. The report warns that stablecoins could pose a run risk and that they are currently too risky to satisfy any need.
Decentralized finance (defi) platforms are also mentioned in the report. The authors warn that defi platforms acting as unregulated banks, broker-dealers, exchanges and other entities subject to regulation should be operating in compliance with existing regulations and rules. The report also emphasizes that defi protocols create serious risks to investors such as the use of significant leverage and the performance of regulated functions without compliance with appropriate regulations.
The Biden administration’s economic report concludes that crypto assets and defi are too volatile when compared to traditional assets. According to the White House, crypto assets are “mostly speculative investment vehicles” and fail to serve as effective units of account. The report argues that cryptocurrencies do not perform well as a medium of exchange due to their limited acceptance and high volatility, which prevents them from being reliable stores of value.
The authors of the report also criticize Web3, referring to it as the “so-called new Internet” and dismissing the benefits that its proponents claim. The report states that crypto assets do not offer investments with any fundamental value and that they cannot serve as an effective alternative to fiat money.
Overall, the Biden administration is skeptical of the value and potential of crypto assets and defi due to concerns over their volatility, limited acceptance, and regulatory compliance. The report suggests that regulating crypto assets is the best approach to this new technology, whether it lasts or not. The report also points out that bad actors could leverage digital assets to inflict disruption in financial markets.
Since the report was published, it has become a topical conversation for crypto proponents on social media and forums. Many believe that the report undermines the potential of crypto assets and defi and that it fails to understand the innovation behind these technologies.
Crypto assets have been gaining popularity over the past few years due to their potential to disrupt traditional finance. They allow for some degree of anonymity, accessibility, and flexibility that fiat currency cannot match. These attributes make them an attractive investment vehicle for many people around the world.
Despite the potential benefits of crypto assets and defi, the Biden administration believes that they pose significant risks to investors and the broader financial system. The report emphasizes the importance of regulatory compliance and suggests that regulation is necessary to prevent illicit finance risks and ensure financial stability.
In conclusion, the Biden administration’s economic report has deemed crypto assets and defi as “mostly speculative investment vehicles” that are too volatile when compared to traditional assets. The report highlights the risks associated with stablecoins and their potential to disrupt financial stability. Decentralized finance (defi) platforms are also mentioned in the report, and the authors warn that they need to operate in compliance with existing regulations and rules. While the report has sparked a conversation among crypto proponents, the Biden administration believes that the best approach to this new technology is to regulate it.
