President Joe Biden has officially taken a stance on crypto, and guys… It’s not good. It’s downright pessimistic and comes close to a full-on attack on crypto. Let’s talk about the nitty gritty and get into this now-infamous report.
The Washington report essentially claims that crypto has so far failed to deliver on its promised benefits, such as improving payment systems, promoting financial inclusion, and creating mechanisms for the distribution of intellectual property and economic value that bypass intermediaries (aka banks)—we all know how that ended just a week ago with Silicon Valley Bank, CreditSuisse, among the many now failed banks.
Biden Administration Mentions Terra & FTX
“So far, crypto assets have brought none of these benefits,” the report claimed. Rather, most innovation in crypto has actually been focused on generating artificial scarcity to pump asset prices, the Biden administration said. The report cited last year’s collapse of the Terra blockchain ecosystem and FTX as examples.
The Biden administration recently came out swinging against claims that crypto is decentralized, saying that blockchain-based applications aren’t actually decentralized or trustless. But here’s the thing: only a small group of miners dominate the mining scene for most assets. And let’s not forget that users have to go through a limited number of platforms to access crypto assets.
It’s ironic for the Biden administration to make this statement, considering how authorities and regulators have been leaning on US banks to distance themselves from the crypto industry.
This so-called “operation chokepoint 2.0” is limiting everyday folks’ options for accessing crypto assets. Regulators deny that they’re trying to de-bank crypto companies, but it’s hard to ignore the effect this is having.
Report Had No Recommendations For Crypto
Instead, it made a case for centralized solutions like FedNow, a real-time payment network that’s on the way, and central bank digital currencies. But it remains to be seen whether these centralized solutions can really offer the same benefits as decentralized systems.
When it comes to crypto, the Biden administration risks missing the forest for the trees. Yes, there is a tonne of scams, illegitimate projects, and hackers in space. There are lots of cryptocurrencies and networks masquerading as legitimate projects, but they are highly centralized and prone to corruption.
Sure, there are highly centralized crypto platforms (like FTX was) whose existence sort of defeats the point of crypto in the first place.
Don’t Forget About Bitcoin
“Ensure sufficient oversight and safeguard against any systemic financial risks posed by digital assets.”
Take the Bitcoin network, for example. Yes, it guzzles a lot of energy (as the Biden administration derides). But no one can seriously deny its high degree of decentralization and robustness.
The Biden administration seems not to understand or care about why decentralization is important.
Bitcoin, an incorruptible, censorship-resistant network, acts as a bulwark against authoritarian governments who want to use their control over money to control their populations.
But maybe it shouldn’t be a surprise that people working in government, who tend to think the government knows best and should be handed more power, are having an allergic reaction to a technology designed to reduce the government’s power.
It’s silly for the Biden administration to claim that most crypto innovation is just about creating artificial scarcity to pump prices. There is so much more to crypto than simple 1s and 0s. Let’s hope the government sees what we do: crypto changes lives!
