US President’s Council of Economic Advisers Report “Crypto Assets Are Not Bringing Any Benefits”


Annual Report of the President’s Council of Economic Advisers

The 2023 Annual Economic Report published by the United States Presidential Committee of Economic Advisers on the 21st showed a negative view on crypto assets (virtual currency) and Web3 (decentralized web) technology.

The White House Advisory Council, which advises the president on policy, also recommended in the report that “the United States should focus on its own digital financial infrastructure.”

The chapter on cryptocurrencies is about 43 pages long and takes up 15% of the annual economic report. It also explains the technical specifications and cryptographic technology of virtual currencies, mainly Bitcoin, but most of them criticize virtual currencies.

A comprehensive description of the niche fraud cases that occurred before that, including the collapse of the virtual currency exchange FTX and the Terra (formerly LUNA) ecosystem that occurred in 2022. In addition, he highlighted market issues such as “risk of a run on stablecoins,” “excessive power consumption (mainly for bitcoin mining),” and “uncertainty of Tether (USDT) reserves.”

On top of that, the President’s Council of Economic Advisers has a negative view that “most of them are just investment targets,” “(Bitcoin) does not function as a store of value,” and “harmful to consumers and investors.” is shown.

Crypto-assets offer benefits such as improved payment systems, increased financial inclusion, and mechanisms for the distribution of intellectual property and financial value that bypass intermediaries that extract value from both providers and users. has been argued to be possible. But … so far, crypto assets have delivered none of these benefits.

The President’s Council of Economic Advisers also criticized Web3 (the decentralized web). Citing Moxie Marlinspike, the founder of encrypted messaging app Signal, he explained the benefits of a centralized internet.

The Internet is often centralized to make things easier. Centralized server hosting can be cheaper and more reliable for large companies and can benefit from economies of scale.

connection:US Fed plans to launch instant payment service ‘FedNow’ in mid-2023

Counterarguments from market players

Many industry insiders have raised objections to the President’s Council of Economic Advisers’ claims. William Mougayar, author of The Business Blockchain, called it a “very selective and incomplete sample of blockchain, a very biased view of crypto assets.”

Economist and noted cryptocurrency analyst Alex Krüger has also tweeted his outspoken opinion on the White House’s analysis of the cryptocurrency market.

The White House report lacks nuance, overlooks the potential benefits associated with this emerging technology, and presents a one-sided view that may mislead readers.

FedNow recommended

There is also a view that the report of the President’s Economic Advisory Committee shows the policy position of the Biden administration. Matthew Homer, a former deputy director of the New York Department of Financial Services (NYDFC), told US cryptocurrency media CoinDesk:

The volume of interest in digital assets is sizable compared to things like U.S. banking services, which have been far more problematic in the past few weeks. His hodgepodge ratings and assertive tone are symbolic.

In particular, the report praises FedNow, a real-time payment service being developed by the Federal Reserve (Fed).

Some argue that instant payment systems like FedNow will reduce the need to circulate digital money (referring to CBDC). There will be little benefit to circulating digital money after FedNow launches.

FedNow, which is scheduled to start service in the middle of 23, will allow companies and individuals to make payments 24 hours a day, 365 days a year through banks, etc., and the transaction time is expected to be shortened to a few seconds. Access to the service will be through the Fed’s network of connections to more than 10,000 financial institutions.

connection:US Fed plans to launch instant payment service ‘FedNow’ in mid-2023

In the United States, President Biden signed the “Executive Order to Ensure the Responsible Development of Digital Assets” in March 2010, and is determined and prepared to continue to lead innovation in the digital economy even in the era of Web 3.0. and ordered the compilation of a national strategy.

connection:Why did the Japanese government start promoting the “Web3 policy”?Summary of important points and related news

What is Web3

The current centralized web is defined as Web 2.0, and refers to an attempt to realize a non-centralized network using blockchain. A typical feature is the use case of decentralized networks such as blockchain, such as access to dApps using virtual currency wallets.

▶Cryptocurrency Glossary

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