President Joe Biden’s economic report on Monday was a turning point for the cryptocurrency sector since it contained some of the White House’s most frank statements on virtual currencies to date. The government described these asset classes as mostly speculative investments lacking basic anchors and unable to fully perform all the functions of fiat money in its section under “The Perceive Appeal of Crypto Assets.”
Biden Administration also Highlights the Risks Involved with Stablecoins and DeFi
The Biden administration is also worried about the vulnerabilities that could be posed by decentralized finance (DeFi) systems and stablecoins. A certain class of digital asset called stablecoins may harm US financial stability.
The White House has demanded that these assets be managed in accordance with the laws and norms that are relevant. This judgment may not come as a surprise to a seasoned crypto veteran, yet it is impressive given the seismic shifts in the general public’s perception of cryptocurrencies over past years. Our understanding of the potential of blockchain technology has advanced quickly, despite the lukewarm recognition of bitcoin, ethereum, and other tokens as valid asset classes.
Yet, some argue that bitcoin should still be accepted as a workable financial instrument in spite of the president’s assessment. While some of the characteristics of traditional money may not be met by cryptocurrencies, their proponents point out that they do have some distinct advantages over most alternative assets, such as increased transparency and liquidity.
And while cryptocurrency assets could easily experience high volatility because of their relatively nascent status, if used carefully, they can also offer a potentially profitable investment opportunity.
Whatever side of the argument you are on, one thing is clear: The debate around cryptocurrencies is far from over. Even while the underlying technology continues to advance at a breakneck speed, we will likely see an increase in laws around cryptocurrencies as more government institutions come on board.