Bitcoin could benefit U.S. economy, macroeconomist says

Macroeconomist Luke Gromen has said that the United States can benefit from adopting bitcoin.

He said during a Natalie Brunell podcast appearance on September 14 that adopting bitcoin as a legal asset would give the United States a chance to create an "economic boom". At the same time, the U.S. could help other countries, including China and Russia.

Gromen said that bitcoin could be an option for the U.S., especially if China and Russia "blow up" in the bond market. Currently, U.S. policymakers still see bitcoin as a threat to the U.S. dollar.

“Bitcoin can be a sovereign asset of the United States, it could really be a huge positive asset for the U.S.,” Gromen said. “I think ultimately the powers that be associated with the financial side of the U.S. absolutely see it as a threat, it doesn’t have to be.

"It depends on how we could use it. If we came out and said all right Russia and China you want to stockpile gold we’re going to settle trade in Bitcoins. Like boom, it totally blows up the bond market. We would have an economic boom.”

The macroeconomist said he acknowledged that bitcoin was a threat to the dollar but ruled out the possibility of the asset eventually replacing it. He said that the growth of bitcoin should not be seen as a bubble.

“It’s not bubble, it’s telling you what’s happening,” he said. ”It’s been a very good indicator of liquidity up and down and so I think it’s a threat. I don’t know that it necessarily needs to replace the dollar. I don’t think that it will.”

He said that although bitcoin is affected by government policies, the chances of the asset being destroyed are low, like China's attempt to outlaw its flagship cryptocurrency. His statement came as the U.S. debates cryptocurrency regulation. The U.S. government recently released the first cryptocurrency framework, which calls for the regulation of digital assets.

Because of its increasing popularity, the Joe Biden administration has recently become active in pursuing more control over cryptocurrencies through legislation. Several governmental collaborated to tackle seven primary issues of cryptocurrencies, including protecting consumers and businesses, promoting financial services, fostering financial stability, supporting innovation, fighting financial crime, maintaining the country's position as a financial leader and exploring the possibility of a digital dollar.

“Together, we are laying the groundwork for a thoughtful, comprehensive approach to mitigating digital assets’ acute risks and—where proven—harnessing their benefits,” NEC Director Brian Deese and National Security Advisor Jake Sullivan said.

Government's distrust of bitcoin

Bitcoin was introduced in 2008 and has generated controversies since. The United States is one of the countries that refuse to recognize bitcoin as legal tender.

In its current form, bitcoin poses challenges to a government's authority. It is often used by criminals, may help citizens circumvent capital controls and cannot be regulated. The government's skepticism about cryptocurrency can be attributed to both fear and a lack of transparency about its ecosystem.

The cause-and-effect relationship between bitcoin price and global developments is not much known. Scams have troubled its development as an asset class. The Security and Exchange Commission said in a January 2018 letter that there were several issues with cryptocurrency exchanges, from a lack of transparency to the presence of bitcoin whales.