As people flee the banking system into Bitcoin, even the U.S. President is attempting to besmirch the world’s most popular cryptocurrency.
In the recently released annual Economic Report of the President, Bitcoin was given some rough treatment. It was mentioned no less than 75 times in the report, and was compared extremely unfavourably with the U.S. government’s choice of a central bank digital currency (CBDC).
What does crypto do?
The report did include a section on how Bitcoin works and stated that Bitcoin came about as “something of a repudiation of the existing financial intermediaries that caused the crisis” (Great financial crisis).
Then follows what is perceived by the report to be “claims” on what Bitcoin can do. This is set down as:
- Crypto Assets Could Be Investment Vehicles
- Cryptocurrencies Could Offer Money-like Functions without Relying on a Single Authority
- Crypto Assets Could Enable Fast Digital Payments
- Crypto Assets Could Increase Financial Inclusion
- Crypto Assets Could Improve the United States’ Current Financial Technology Infrastructure
The reality of crypto
Next is what the report calls The Reality Of Crypto Assets”. Here it attempts to debunk the earlier “claims” of cryptocurrencies. It starts by stating that “crypto assets are mostly speculative investment vehicles”, calling them “volatile” and therefore “highly risky”.
The report authors call into question cryptocurrency as “money”, and declare that cryptocurrencies “generally do not perform all the functions of money as effectively as sovereign money” (e.g. US dollar).
“Run risk”
Stablecoins are also maligned in that they are said to be “subject to run risk”. This does seem a little rich considering the current environment of impending bank runs, which has only been averted for the time being due to the sheer amount of currency that has been thrown at the problem by the Federal Reserve and other central banks. No mention either of how the general public will pick up the tab through severe dilution of fiat currencies that rob people of purchasing power.
Fraud, Blockchain, and CBDCs
Next is the assertion that “crypto assets can be harmful to consumers and investors”, stating that many of the participants in the crypto sector do not comply with existing laws and regulations. Crypto “fraudsters” are singled out, such as BitConnect and FTX, and explanations are given as to how their frauds were carried out.
A section on how Distributed Ledger Technology (DLT) and Blockchain are just glorified databases comes next, and then all the “other risks” of digital assets that the report’s authors could think of.
The report then gets on to eulogising on how a central bank digital currency (CBDC) can “realise the benefits that crypto asset developers have promised”.
Fully fledged attack on crypto
The publishing of such a report leaves no one in any doubt as to the Biden Administration’s stance on Bitcoin and cryptocurrencies. Operation Choke Point is very real, and it would appear that the government will go to any lengths in order to cut crypto off from the banking system and drive people out of cryptocurrencies.
Perhaps what is being said here might fall on deaf ears, given that the vast majority of the population will very likely not read the report, but given some of the technical explanations it is probably aimed at the upper end of the population.
It must have been more than slightly problematic to have released this report on the back of bank failures and the biggest currency printing spree since Covid, but with a banking meltdown potentially on the cards within the year, no time better than the present.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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