Industry related to digital assets will need to batten down the hatches against the government and regulators, not limited to, but especially in the USA. The recent release of the 2023 Economic Report of the President, a target has clearly been placed on digital assets to either be reformed or more aggressively destroyed.
In the impressively substantial 513-page report, focuses heavily on a plethora of aspects related to many digital assets and infrastructure. Setting the tone very early on stating “blockchain technology has fueled the rise of financially innovative digital assets that have proven to be highly volatile and subject to fraud.”
The report was unequivocal in its stance, claiming that, besides being highly dysfunctional at complying with pre-existing financial law, cryptocurrencies have failed comprehensively at solving all the problems they sought to solve and do not provide any of the benefits they claim to have innovated.
Citing decentralised custody, control of money and assets, improved payment processes and systems, complete financial inclusion, invention of mechanisms for the distribution of intellectual property and financial value while bypassing intermediaries, in a list of self-proclaimed creations and innovations. The report claims, in a damming fashion “crypto assets have brought none of these benefits.”
The report continues to state that the entities and tools crypto has attempted to overleap remain increasing valuable, failing to provide a viable alternative as an investment with a considerable or even existent ROI, failing to provide an adequate or improved replacement to fiat currency, failing to improve financial inclusion in any form, or even make payment more efficient. The report instead puts fourth “their innovation has been mostly about creating artificial scarcity in order to support crypto assets’ prices.” Various crypto disasters occurring in the previous year were used as ammunition against the sector, including crashes involving Bit Connect and FTX as well as the collapse of TerraUSD.
Web 3.0 was also criticised in its entirety noting Signal app founder, Moxie Marlinspikes conceded that some centralisation is inevitable, “once a distributed ecosystem centralizes around a platform for convenience, it becomes the worst of both worlds”.
Although many attempts have been made by the US Government claiming that there are no plans in place to de-bank or strangle the sector, this report makes their policy direction crystal clear and could signal a time of great disruption and hinderance to the digital economy.
The report itself did not make suggestions or recommendations in regards to future congressional and regulatory action that could address all the stated risks and detriment cryptocurrencies could have. Simply noting the lack of planning and understanding of economic principles that have been learnt through careful study of the painful disasters and financial fluctuations of centuries gone by. Expressing how these same lessons will have to be even more painfully taught to those involved with the industry before they can be in anyway beneficial, should they not take the time restructure themselves from within. Suggesting the need for deliberation and co-ordination for the various agencies related to crypto.