China Will Dominate Global Digital Finance Warns Coinbase CEO

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In an opin­ion piece on May 30, the Coin­base CEO wrote that recent cryp­to indus­try tur­bu­lence “might make it tempt­ing for pol­i­cy­mak­ers to write it off as an unsta­ble asset class.”

This is effec­tive­ly what U.S. reg­u­la­tors have been doing, miss­ing the for­est for the trees in treat­ing cryp­to as a spec­u­la­tive or gam­bling tool rather than a finan­cial tech­nol­o­gy foundation.

“Fail­ing to see that cryp­to is about much more than indi­vid­ual trans­ac­tions risks America’s time-hon­ored role as the glob­al finan­cial leader and an inno­va­tion hub.”

Coinbase Boss on China

The mes­sage has been reit­er­at­ed by sev­er­al indus­try exec­u­tives and even a num­ber of high-rank­ing sen­a­tors. How­ev­er, it has fall­en on deaf ears so far, with the Secu­ri­ties and Exchange Com­mis­sion (SEC) refus­ing to acknowl­edge that this new asset class needs its own legislation.

“By enforc­ing restric­tive poli­cies, the U.S. is inad­ver­tent­ly dri­ving cryp­to-inno­va­tion off­shore,” said Armstrong.

He went on to state that Amer­i­ca and oth­er demo­c­ra­t­ic nations are up against dig­i­tal sys­tems “pro­mot­ed by an ambi­tious adver­sary, China.”

Chi­na is pro­mot­ing its dig­i­tal plat­forms Ali­pay and Ten­cent glob­al­ly through its Belt and Road Ini­tia­tives, he cau­tioned. There is also the dig­i­tal yuan cen­tral bank dig­i­tal cur­ren­cy (CBDC) which is being pushed hard by Bei­jing. Fur­ther­more, Chi­na aims to direct­ly chal­lenge the U.S. dol­lar and its role in glob­al com­merce, warned Armstrong.

“Giv­en these moves and China’s strat­e­gy to lever­age finan­cial tech­nol­o­gy to pro­tect its own nation­al inter­ests, it should come as no sur­prise that Hong Kong is posi­tion­ing itself as a glob­al cryp­to hub.”

Chi­na is the biggest threat, but oth­er nations are rac­ing ahead with the roll­out of cryp­to reg­u­la­tions. These include the U.K., Unit­ed Arab Emi­rates, Brazil, Japan, the Euro­pean Union, Aus­tralia, and Sin­ga­pore, all of which are vying to become cryp­to hubs.

U.S. Financial System Falling Behind

The Coin­base CEO went on to reveal that the major­i­ty of Amer­i­cans feel the cur­rent finan­cial sys­tem doesn’t serve their inter­ests. Sur­veys sug­gest that 70% believe their chil­dren will be worse off if noth­ing changes. Gal­lop­ing nation­al debt (which now has no lim­it) and ram­pant infla­tion are affect­ing all but the wealth­i­est Americans.

“If we fall short today, the next gen­er­a­tion of Amer­i­cans will pay the price,” he warned.

Coin­base was threat­ened with legal action by the SEC in March. The firm has request­ed clar­i­ty on reg­u­la­tions and dia­logue with the reg­u­la­tor, which con­tin­ues to put up walls and deny its appeals.

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