US Treasury Recognizes Bitcoin as Digital Gold in Emerging Economies

The U.S. Department of the Treasury has recognized Bitcoin (BTC) as "digital gold," emphasizing its primary role as a store of value. Along with this recognition, the Treasury Department has emphasized the growing importance of stablecoin, driving demand for Treasury bonds in the evolving financial landscape. Also Read: Global e-commerce giant Amazon is considering investing in Bitcoin The Treasury Department Recognizes Bitcoin and Stablecoin The Treasury report highlights the rapid expansion of digital assets, including Bitcoin, Ethereum, and stablecoin, but notes that the market remains small compared to traditional financial instruments like U.S. Treasury bonds. "The primary use case for Bitcoin appears to be as a store of value, or 'digital gold,' in the decentralized finance (DeFi) world," the Treasury said. The financial regulator noted that Bitcoin has established itself as a store of value similar to gold. According to the report, Bitcoin's market value has grown from $6.4 billion in 2015 to $134 billion in 2019 and is expected to reach around $1.3 trillion by 2024. This growth reflects the increasing interest in DeFi and digital tokens. Comparison of the Crypto Market with Other Assets. Source: U.S. Department of the Treasury In fact, the report comes amid growing comparisons between Bitcoin and gold, including recent statements by Federal Reserve Chair Jerome Powell. This has bolstered optimism in the crypto market, viewing Bitcoin as an important component of the financial future. However, the U.S. Treasury Department noted that most participants in cryptocurrencies are speculative investors, aiming to increase their value in the future. Therefore, digital currencies have not yet replaced traditional assets like Treasury bonds, which are still in high demand. "Structural demand for Treasury bonds may increase as the market capitalization of digital assets grows, both as a hedge against price volatility and as a 'on-chain' safe asset," the Treasury said. To clarify, the Treasury report has emphasized the rapid expansion of stablecoin and their growing role in the cryptocurrency ecosystem. Over 80% of all cryptocurrency transactions involve stablecoin, playing a key role as the primary medium in digital markets. Stablecoin providers backed by fiat currency, such as Tether, primarily rely on U.S. Treasury bonds and other Treasury-backed assets as collateral. These holdings account for around $120 billion in U.S. Treasury bonds. As the stablecoin market grows, demand for Treasury securities is expected to increase. This will be driven by their use as a hedge against price volatility and as a safe asset within blockchain networks. Tether's Holdings of U.S. Treasury Bonds. Source: U.S. Department of the Treasury Overall, the Treasury Department's recognition of Bitcoin and stablecoin reflects the growing convergence between traditional finance and blockchain-based innovations. While the department maintains a cautious stance, its acknowledgment of digital assets indicates a willingness to explore their potential. Join the BeInCrypto Community on Telegram to stay updated on the latest analysis and news about the financial markets in general and cryptocurrencies in particular.