China shouldn’t stroll to the front for next-generation technology for financial services, a U.S. invention Regardless of what happens in the election, regardless of what one thinks the direction of the country should be, virtually everyone on the planet agrees that it would be better for the United States to remain the No. 1 economic, cultural, and military power in the world rather than, say, the Chinese Communist Party. The warning sign that the whole world should realize is the CCP’s deceitful mishandling of the COVID-19 pandemic. They are responsible for the disease, but Americans will probably be responsible for the cure. That one fact undergirds everything we do best — we are the No. 1 source for innovation in the world.
China has clawed its way to a lot of No. 2 spots — mostly by lying, cheating and stealing — but as long as we can keep beating them on innovation, they will never overtake us. That’s why it is so alarming that in cryptocurrencies — the next generation technology for financial services we invented – America is letting the Chinese stroll right up to the front.
A lot of the blame falls on Jay Clayton and the Securities and Exchange Commission (SEC) he has chaired since the beginning of Donald Trump’s presidency. A weak point in Trump’s otherwise robust economic policies, the Clayton SEC should have led the charge for a regulatory framework that nurtured and cultivated America’s crypto innovators while weeding out the usual bad actors. Out of the gate, he was a disappointment to advocates of market-driven change in support of U.S. industries and technologies. Clayton has too often led like a Democrat – no carrot, all stick and zero vision.
Congress hasn’t done any better. They were all too ready to use the Libra cryptocurrency platform proposed by Facebook as a pretext to hurl political Molotov cocktails at the social media giant for the cameras. It was quite clear from watching that while they wanted the world to know how much they hated Facebook, not many House members understand cryptocurrencies as well as they need to. When Congress is too busy fighting with itself, there’s no time to learn the ins and outs of a multi-billion dollar, homegrown industry poised to revolutionize financial services.
This neglect is not benign. The lack of a sound regulatory framework that protects and strengthens the innovators as much as guards against criminality translates into chaos. Innovators already face high risks, but this level of legal uncertainty makes doing it here in America an almost unsustainable challenge. For nearly a decade, this technology has been taking root and evolving into a whole array of real economy applications from American innovators that could transform how we handle money, store value, make payments and build supply chains. Just as those products are building to cross over into mass adoption, the companies that will sell them to the world find it impossible to do business here anymore.
Then there’s China, laying in wait and watching us bungle this. The People’s Bank of China has been hard at work developing a digital yuan, and have already signed up nearly 2 million citizens for a massive lottery for the first issuance. Chinese crypto miners have spent years mining bitcoin so intensively that they now control its value. It’s what they know how to do – take our inventions, copy them and shove mass adoption down onto their billions of subjects with an eye towards dominating the global marketplace.
President Xi Jinping has included blockchain as a goal for his country to overtake us, blockchain development ranks among the Chinese State Council’s 13th Five-Year Plan goals, China has filed the most patents related to blockchain in the world, and Chinese crypto-magnate BabelBank reports a boom in speculative borrowing for crypto investment.And now it’s becoming urgent for the feds to get their act together fast. There is great disruption in the global economy with an inevitable need for innovative, modernizing tools in the recovery period that can quickly revive and expand economic activity. It’s a perfect time for the American crypto industry to step in. It will take a combination of vision, determination and belief in the intrinsic importance of American leadership to get it done in time.
If China is able to supplant America as the No. 1 economy in the world, it will then quickly likewise be able to supplant us as the No. 1 military too. The right kind of leadership from Washington on cryptocurrency can make sure that doesn’t happen.