[NEWS] US Treasury Department recognizes Bitcoin as "digital gold"

On the 6th, the US Treasury Department mentioned Bitcoin (BTC) in its fourth quarter report for fiscal year 2024, stating that it "plays a role as digital gold."

This was mentioned in the "Trends in Growth and Use of Digital Assets" section of the report, and the Treasury Department explained that "Bitcoin's main use case is as a store of value in the world of DeFi (decentralized finance)." It continued, "speculative interest to date has played an important role in the growth of digital tokens."

Until now, Bitcoin has been recognized as digital gold, mainly in the Web 3.0 area, but it seems that public institutions such as the Ministry of Finance have also taken a similar view.

The report also touches on the market size of crypto assets (virtual currencies), stating that "although small, it has grown rapidly." In particular, it states that the growth is being driven by crypto assets such as Bitcoin and Ethereum (ETH), as well as the presence of stable coins.

On the other hand, it is said that the adoption of crypto assets is still limited to within the industry, and that the main reason is probably "holding for investment purposes." The market capitalization is still very low compared to existing finance and real assets, and it does not affect the demand for U.S. Treasury bonds.

As an example of the use of cryptocurrencies, "efforts are being made to develop new applications and improve traditional clearing and settlement infrastructure using blockchain and distributed ledger technology (DLT)," and he expressed the view that there are other factors that are attracting interest besides Bitcoin's role as digital gold.

Recently, Federal Reserve Chairman Jerome Powell also mentioned that Bitcoin "also has the properties of gold." On the other hand, Chairman Powell also indicated that he does not consider Bitcoin's volatility as a means of storing value.

The report also focuses on stablecoins and explores the reasons for their growth. The report cites the maturation of the cryptocurrency market as well as their use in DeFi as reasons for their growth. In particular, it adds that 80% of cryptocurrency transactions are conducted through stablecoins.

As for future prospects, the Treasury Department states that in the short term, the scale of stablecoins will continue to grow, and the cryptocurrency market will expand accordingly. On the other hand, it also states that "in the medium to long term, regulations and related policies will determine the fate of the industry," and that given the historical background, there is a possibility that regulations will be imposed in an undesirable direction for the industry, given that this could lead to financial instability.

Reference: Report
Image: Shutterstock

Related articles

Brazil introduces bill to create Bitcoin reserve

Bitcoin hits major milestone of $100,000