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Economic Report: US President Warns Against Cryptocurrencies

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According to reports, in 2023, the US President\’s Economic Report was released, with a total of 9 chapters. Chapter 8, \”Digital Assets: Learning Economic Principles Again,\” first i

Economic Report: US President Warns Against Cryptocurrencies

According to reports, in 2023, the US President’s Economic Report was released, with a total of 9 chapters. Chapter 8, “Digital Assets: Learning Economic Principles Again,” first introduces the potential advantages of cryptocurrencies, including improving payment systems, enhancing financial inclusiveness, and creating a mechanism for allocating intellectual property and financial value; Subsequently, it was pointed out that crypto assets did not bring any relevant benefits, pointing out that crypto assets are mainly speculative investment tools, cryptocurrencies generally cannot effectively play all the functions of currencies like sovereign currencies (such as the United States dollar), stable currencies may be affected by operational risks, crypto assets may cause losses to consumers and investors, and the economic benefits of distributed ledger technology (DLT) are limited Financial innovation risks, as well as other risks such as leverage risks, price fluctuations, illegal financial risks, and the use of extortion software. In addition, this chapter also discusses the upcoming improvements to US payments and the introduction of CBDC. The chapter concludes that “crypto assets are too risky to serve as payment instruments or expand financial inclusion, and they appear to continue to exist, posing risks to financial markets, investors, and consumers.”.

2023 US Presidential Economic Report: Cryptographic assets are too risky to be used as a payment tool or to expand financial inclusion

Introduction

The US President’s Economic Report 2023 is a comprehensive analysis of the American economy. Chapter 8 of the report, “Digital Assets: Learning Economic Principles Again,” focuses on the potential benefits and risks of digital assets, particularly cryptocurrencies. This article will delve into the key takeaways from the report and highlight its concerns about the use of cryptocurrencies.

Advantages of Cryptocurrencies

The report states that cryptocurrencies have the potential to improve payment systems, enhance financial inclusiveness, and create a mechanism for allocating intellectual property and financial value. However, it quickly points out that these advantages are theoretical, and cryptocurrencies have so far failed to deliver on their promises.

Cryptocurrencies as Investment Tools

According to the report, cryptocurrencies are mainly speculative investment tools that cannot effectively play all the functions of sovereign currencies like the US dollar. Stablecoins may also be affected by operational risks, and cryptocurrencies may cause losses to consumers and investors. Furthermore, the report highlights the risks of price fluctuations, illegal financial activities, and the use of extortion software.

Limited Financial Innovation Risks

The report acknowledges the potential benefits of distributed ledger technology (DLT), but it also points out that the economic benefits of DLT are limited, and the technology poses financial innovation risks. The report says that distributed ledger systems face challenges such as scalability, energy consumption, and privacy.

Central Bank Digital Currency

The report also discusses the introduction of Central Bank Digital Currency (CBDC) in the United States. The report highlights that the US is currently considering developing a CBDC but acknowledges that there are still many unanswered questions and challenges that must be addressed before the technology is implemented.

Conclusion

The US President’s Economic Report concludes that cryptocurrencies are too risky to serve as payment instruments or expand financial inclusion. The report highlights the risks that cryptocurrencies pose to financial markets, investors, and consumers. The report states that while cryptocurrencies may continue to exist, the risks associated with them must be addressed.

FAQs

1. Why does the US President’s Economic Report warn against cryptocurrencies?
The report warns against cryptocurrencies due to their speculative nature, risks to investors and consumers, and limited benefits.
2. What are the potential benefits of cryptocurrencies?
Cryptocurrencies have the potential to improve payment systems, enhance financial inclusiveness, and create a mechanism for allocating intellectual property and financial value.
3. What are the risks associated with cryptocurrencies?
The risks associated with cryptocurrencies include the potential for price fluctuations, illegal financial activities, extortion software, and operational risks. Stablecoins may also be affected by operational risks, and cryptocurrencies may cause losses to consumers and investors.
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