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In recent weeks, the United States has seen particularly positive momentum in recognizing the legitimacy of bitcoin. This causes a break with the rather anti-crypto position that had developed through regulation and numerous speeches. However, the tide has turned at the US Treasury, the latter having published a report which relates in part to the king of cryptocurrencies.
The publication by the US Treasury of a tax report
Recently, the US Treasury published its fourth quarter fiscal report, concerning its fiscal year 2024which is called “Digital Assets and the Treasury Market“. Organized over 25 pages, the report aims to discuss key themes such as the growth of digital assets in the US Treasury market, current internal efforts around blockchain and tokenization and how blockchain can enable the US Treasury to innovate.
All these themes are part of the development of digital finance in recent years, we can look at the “Trends in growth and use of digital assets” part.
Bitcoin, recognized as “digital gold”
On this same part, concerning trends in digital assets, the Treasury is aware of the importance of stablecoins in the increase in market capitalization :
“Growth has come from both native cryptocurrencies like bitcoin and ethereum, as well as stablecoins”
Subsequently, it was mentioned in the report that:
“The main use case for bitcoin appears to be a store of value, aka “digital gold” in a world where finance is decentralized”
This assertion is particularly interesting and is close to Jerome Powell’s recent speech a few days earlier when he referred to bitcoin as a competitor to gold.
Between this speech and the Treasury report, we note that bitcoin is taken more seriously than ever. Indeed, gold has this reputation as a historical store of value, one that has spanned the millennia. The positioning of highly important institutions and political figures is not an event to be taken lightly for the future of the king of cryptocurrencies.
Altcoins, also mentioned in the report
In this same report resides a part entitled “What are stablecoins and why are they growing?“. With a specific development on their rapid development and gain in popularityparticularly in relation to decentralized finance, the American Treasury highlights a diagram of understanding concerning the different use cases.
Explaining the essential role of stablecoins in the intermediation of digital asset markets (whereas previously it was bitcoin), this explains this growing distinction between this asset class and the king of cryptocurrencies as a store of value. This therefore results in a comparison to gold which is increasingly common with regard to the different technical properties of bitcoin.
Correlation between Treasury bills and the development of stablecoins
This part on stablecoins is very interesting, it gives us allows you to refer to a point that the US Treasury raised in the report regarding the cryptocurrency market explaining that he:
“does not appear to have cannibalized demand for Treasury bonds”
This is mainly explained by exposure to treasury bonds from digital currency issuers such as Circle, Tether and others in order to build their reserves and collateral. This provides stability to the value of their assets, thereby avoiding a loss of anchoring in order to cope with periods of high volatility and selling pressures.
This comparison of the US Treasury to gold could bring a new wave of entrants to the marketwhile encouraging a growing number of American states to gain exposure to this asset. The end of 2024 is bustling and it doesn’t seem ready to stop, which opens up great prospects for the year 2025 when Trump’s inauguration will take place.
Sources: United States Department of the Treasury
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