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Larsen warned that the regulators’ heavy-handed approach with the crypto space can lead to the U.S. losing its financial dominance to its economic arch-rival China. He added that the current regulatory approach is discouraging FinTech companies to stay in the U.S.
Blockchain is the new battle-field for global economies and technology giants to compete. Last week speaking at the LA Blockchain Summit, Ripple Executive Chairman and co-founder Chris Larsen said that the U.S. can probably lose its financial dominance to China.
Speaking at the Summit, Larsen said that China is “itching” to be a leader in designing the next financial system. He also goes to add that the U.S. needs to accept that it’s in a tech cold war with China and that it is “woefully behind”. Larsen added:
“China is just itching to be the one that designs this next system. They’ve committed $1.4 trillion to a variety of technologies and blockchain is right at the top of their list.”
We already know the fact that China has accelerated its work with Digital Yuan. In fact, it has recently gone ahead with testing its Ditial Yuan in the market and registered over 4 million transactions. The U.S, on the other hand, is still in its research phase and we see no serious efforts with testing the Digital Dollar by end of 2020.
The regulatory uncertainty in the U.S. has been one of the major reasons for its slow developments, said Larsen. He specifically blamed the SEC, for holding up innovation in the digital currency space. Larsen said:
“I just have to say it, in the U.S., all things blockchain, digital currency, they start and end with the SEC. Instead of pivoting to encouraging U.S. innovation to keep up, they’ve done the opposite. We’re going to have to change up here or we’re going to lose our leadership, stewardship of the global financial system. That would be a tragedy.”
Ripple Co-Founder: Regulatory Hurdles Can Push Companies Out of the U.S.
In his interview, Ripple co-founder Chris Larsen also said that the company had been having a tough time dealing with the SEC. The San Francisco-based blockchain startup has been fighting multiple lawsuits with XRP‘s ‘security’ status. Larsen said that this has been a big hurdle to his company’s growth.
He noted that if the situation persists, they might have to consider shifting base to other crypto-friendly locations like Singapore, Japan, Switzerland, and even the U.K. Well, Ripple is not the only company facing regulatory challenges. Even giants like Facebook had to establish its Libra Association in Switzerland after fighting a long battle with the SEC.
It’s time that the SEC must rethink its stand on crypto innovation. It must also make sure that they don’t apply the same old rules to innovations in financial space. The SEC also remains divided when it comes to handling innovations in the crypto space. SEC Commissioner Hester Pierce has been much vocal in support of new crypto projects. Popular as the crypto mom, she has also warned the agency of stifling innovation in the financial market.
The tough SEC chairman Jay Clayton recently stated that are open to innovation in the crypto market. However, he warned that market players should not try to play around with the agency’s rules. Speaking about whether the SEC is open to tokenized ETFs, Clayton said:
“We’re willing to try that; our door is wide open. If you want to show how to tokenize the ETF product in a way that adds efficiency, we want to meet with you, we want to facilitate that.”
There have been some positive developments as well. The U.S. regulators are working on pan-America rules for the crypto companies. Besides, the U.S. OCC recently granted banks permission to offer reserve funds for stablecoins and crypto custodial solutions.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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