Rating agency Fitch has issued a warning that congressional debate on whether to raise the debt ceiling could threaten the ‘AAA’ rating of the United States.
The warning illustrates how debt ceiling fights – even if they don’t end in default – can spook markets, potentially creating an aversion to risk among investors that could rattle bitcoin.
It also puts into perspective how congressional spats over the debt ceiling threaten the U.S.’ status as the world’s provider of safe-haven assets.
“Fitch believes that the debt limit will be raised or suspended in time to avert a default event, but if this were not done in a timely manner, political brinkmanship and reduced financing flexibility could increase the risk of a U.S. sovereign default,” the agency said.
Fitch’s note is reminiscent of the 2011 debt ceiling fight that caused another rating agency, Standard and Poor (S&P), to downgrade the U.S.’ rating.
Speaking before the House Financial Services Committee on Thursday, Treasury Secretary Janet Yellen advocated for abolishing the debt ceiling.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.