A Ripple executive believes that the US is losing a “tech cold war” to China due to its strict regulatory approach towards blockchain and cryptocurrency companies.
In an opinion piece for The Hill on August 21, Chris Larsen, co-founder and chairman of the major cryptocurrency company Ripple, said that China’s leadership in digital currencies is a “golden opportunity” to replace the US dollar with the digital yuan as the global reserve currency.
Larsen explained the main reasons why China was winning the United States in the ongoing technological battle. China has achieved a “near-global use of digital payments” through tech giants such as Alipay and WeChat.
And while China is “on the verge” of issuing its central bank digital currency – the digital yuan – the US still lacks a formal digital dollar initiative, Larsen noted, adding:
“At least 65 percent of cryptocurrency mining is concentrated in China, which means that the Chinese government has the majority to exercise control over these protocols and can effectively prevent or reverse transactions.”
Larsen also mentioned China’s security expansion in Hong Kong, claiming that China is now “the only country in the world that controls two global financial centers.”
Larsen concluded that to challenge China’s leadership in technology and cryptocurrencies, the United States must “recognize that strong American financial technology companies serve their national security interests.”
The CEO said the United States should start the digital dollar initiative immediately to keep pace with the digital yuan. The next step is to create Silicon Valley as a global fintech powerhouse.
Larsen’s comments are due to the ongoing regulatory uncertainty surrounding XRP. XRP is the third-largest cryptocurrency by market value and Ripple uses it for cross-border applications like On-Demand Liquidity (formerly known as xRapid).
On August 20, Ripple CEO Brad Garlinghouse confirmed that the biggest challenge facing Ripple so far was lack of clarity about the regulatory status of XRP. Cryptocurrency Project and Ripple are subject to multiple lawsuits alleging that XRP is an unregistered security.