The Biden administration has issued a report stating that Biden says crypto has no fundamental value and that many of them are used for illegal activities such as money laundering and ransomware payments. It was released by the US President’s Working Group on Financial Markets, which also expressed concerns about the potential risks posed by stablecoins and called for greater regulatory oversight of the crypto industry.
Criticism of Cryptocurrencies for Lack of Fundamental Value and Investor Protections
The report noted that while cryptocurrencies such as Bitcoin and Ethereum have seen significant price increases over the past year, they do not have any underlying assets or cash flows to support their valuations. It also highlighted the high levels of volatility and the lack of investor protections in the crypto market, stating that “many crypto assets trade on platforms that lack common investor protection measures.”
Biden said crypto has no fundamental value went on to identify stablecoins, which are cryptocurrencies pegged to a stable asset such as the US dollar, as a potential risk to financial stability. It noted that stablecoins had grown rapidly in popularity and that they have the potential to be used as a means of payment and settlement, which could disrupt the traditional banking system.
Concerns About Stablecoins and Potential Risks to Financial Stability
The report called for increased regulation of stablecoins, stating that “a robust regulatory framework for stablecoins is urgently needed.” The report also suggested that stablecoin issuers should be required to have a “backstop” to ensure that they can fulfil their obligations to holders of the stablecoin and that stablecoins should be subject to the same anti-money laundering and counterterrorism financing regulations as other financial institutions.
Call for Greater Regulatory Oversight of the Crypto Industry
The report where Biden says crypto has no fundamental value has been met with mixed reactions from the crypto community, with some arguing that the report is overly critical of cryptocurrencies and fails to recognize their potential to revolutionize the financial system.
The report comes amid a period of heightened regulatory scrutiny of the crypto industry, with regulators in the US and around the world grappling with how to best regulate the rapidly evolving sector. Overall, the report signals a growing recognition among policymakers of the need for greater oversight of the crypto industry and suggests that we can expect to see increased regulation in the months and years ahead.
Also Read: US Senator Tom Cotton proposes ban of direct-to-consumer central bank digital currency.
