The US Treasury has recognized Bitcoin as ‘digital gold’ in a new report

The United States Treasury Department has recognized Bitcoin as “digital gold”, emphasizing its role as a store of value.

Alongside this recognition, the Treasury Department highlighted the importance of a stable coin that is driving demand for Treasury bills in an improved financial landscape.

Treasury recognizes Bitcoin and Stablecoins

The Treasury report highlights the rapid expansion of digital assets, including Bitcoin, Ethereum and stablecoins, but notes that the market remains small compared to traditional financial instruments such as US government bonds.

“The first use case for Bitcoin appears to be a store of value,” the Treasury said, “digital gold” in the world of decentralized finance (DeFi).

The financial regulator stated that Bitcoin has established itself as a store of value similar to gold. According to the report, Bitcoin's market value has increased from $6.4 billion in 2015 to $134 billion in 2019 and nearly $1.3 trillion in 2024.

In fact, the report comes amid recent comments by Federal Reserve Chairman Jerome Powell that Bitcoin's comparison to gold is growing. This has increased optimism in the crypto market, which sees Bitcoin as a key part of the financial future.

However, the US Treasury notes that most individuals engage with cryptocurrencies as speculative investments, with potential for future value appreciation. Therefore, digital currencies have not yet replaced traditional assets such as Treasury bonds, which are in high demand.

“As the value of the digital asset market continues to grow, the structural demand for Treasuries may increase,” the Treasury said.

For context, the Treasury report highlighted the rapid expansion of stablecoins and their growing role in the crypto ecosystem. Over 80% of all cryptocurrency transactions involve stablecoins that act as key intermediaries in digital markets.

Fiat-backed stablecoin providers like Tether rely primarily on US Treasury bills and other Treasury-backed assets as collateral. These holdings are approximately $120 billion in US Treasuries. Demand for Treasury securities is expected to increase as the stable coin market continues to grow. This is due to price volatility and their use as a secure asset in blockchain networks.

All in all, the Treasury's recognition of Bitcoin and its stability coin reflects the growing trend between traditional finance and blockchain-based innovations. Despite the department's cautious stance, its recognition of digital assets suggests a willingness to explore their potential.