John Ratcliffe, the Director of National Intelligence, wrote to SEC Chairman Jay Clayton about China’s digital currency influence early this month.
China has been on the CBDC path since 2014, when Xiaochuan Zhou, the former governor of the People’s Bank of China, established the Digital Currency Research Institute. The US has taken a more cautious approach. In the previous month, chairman of the US Federal Reserve Jerome Powell advised, “it’s more important to get it right than to be the first.” However, it looks like the US is concerned that China is a long way ahead.
“Unfortunately it is a rather pessimistic outlook, to give US companies a level playing field with the Chinese would require massive deregulation of US securities laws, many of which have been in effect for the better part of a century,” said Jason Brown, the director of business development for Komodo Platform.
To elaborate further, while the US might be concerned about China’s lead in the digital currency world, America’s regulatory rulebook would have to be a significant disturbance to catch up.
According to Brown, when regulations were put in place to protect the consumers, but rules were not followed abroad, America’s effectiveness is damaged.
“These regulations that were intended to protect everyday citizens become an unnecessary burden placed on US companies that effectively handicaps Americans’ abilities to access global capital,” Brown continued.
China’s cryptocurrency grasp
But aside from the regulatory restrictions for digital currencies, the US appeared to be concerned about China’s grasp on cryptocurrencies.
A senior intelligence official told the Washington Examiner that “there are serious national security concerns about China’s control over Bitcoin and Ether.”
The concerns may be the center on the fact that China stays as a Bitcoin mining powerhouse, in large part down to the environment making Bitcoin mining a lucrative venture in the rainy season.
“The weather is a key driver of profit for many Chinese miners, as they can buy old equipment for cheap, but can only be profitable for five months of the year,” Tarak Kulyk, senior vice president of Core Scientific, stated previously.
But even if the rainy season ends in China, the country continues its six-year commitment to embracing digital currencies.
In September this year, China Finance magazine described digital currencies as the “new battlefield.”
Jerome Powell thinks it is better to be right than the first, but it seems that China wants to be both.