The Economic Report of the US President, Joe Biden released earlier this week has criticized cryptocurrency investments calling them “volatile and speculative”.
It deflated opinions viewing cryptocurrencies as an alternative to fiat currencies.
The report, which discussed in detail, the various risks and negatives associated with cryptocurrencies and digital assets even said that cryptocurrencies have no fundamental value.
“crypto assets are very volatile, and, hence, highly risky. Because they are very volatile, crypto assets can be used for speculation, an investment strategy that seeks to make a profit from short-run trading. One reason many crypto assets are highly volatile is that many of them do not have a fundamental value.
“Although the underlying technologies are a clever solution for the problem of how to execute transactions without a trusted authority, crypto assets currently do not offer widespread economic benefits. They are largely speculative investment vehicles and are not an effective alternative to fiat currency.
“Also, they are too risky at present to function as payment instruments or to expand financial inclusion. Even so, it is possible that their underlying technology may still find productive uses in the future as companies and governments continue to experiment with DLT. In the meantime, some crypto assets appear to be here to stay, and they continue to cause risks for financial markets, investors, and consumers, ” the report said.
It however gave a positive review of Central Bank Digital Currency (CBDC).
“Certain innovations, such as FedNow and a potential U.S. CBDC, could help bring the U.S. financial infrastructure into the digital era in a clear and simple way, without the risks or irrational exuberance brought by crypto assets. Hence, continued investments in the Nation’s financial infrastructure have the potential to offer significant benefits to consumers and businesses, but regulators must apply the lessons that civilization has learned, and thus rely on economic principles, in regulating crypto assets, ” the document said.
