The United States is losing the “technological cold war” to China due to its tough regulatory approach to blockchain and cryptocurrency-related companies, a senior executive at Ripple believes.
In an opinion article for The Hill on Aug. 21, Chris Larsen, co-founder and chairman at major crypto payments firm Ripple, said that China’s digital currency leadership is a “once-in-a-century opportunity” to replace the U.S. dollar with the digital yuan as the world’s reserve currency.
Larsen set out the main reasons for China winning the U.S. in the ongoing technological struggle. Namely, China has “already achieved near universal use of digital payments” via tech giants like Alipay and WeChat.
And while China is “on the cusp” of issuing its own central bank digital currency — the digital yuan — the U.S. still does not have an official digital dollar initiative, Larsen noted, adding:
“At least 65 percent of cryptocurrency mining is concentrated in China, which means the Chinese government has the majority needed to wield control over those protocols and can effectively block or reverse transactions.”
Larsen also mentioned China’s security expansion to Hong Kong, claiming that China is now “the only country in the world that controls two global financial centers.”
In order to challenge China’s tech and crypto leadership, the U.S. “must recognize that strong American financial technology companies” are in its own national security interest, Larsen concluded.
The exec said that the U.S. has to start the digital dollar initiative immediately to keep up with the digital yuan, with the next step to be establishing Silicon Valley as a global financial technology powerhouse.
Larsen’s comments come amid the ongoing regulatory uncertainty around XRP. The third-largest cryptocurrency by market cap, XRP is used by Ripple in its cross-border applications like On-Demand Liquidity (formerly xRapid).
On Aug. 20, Ripple CEO Brad Garlinghouse highlighted that the biggest challenge faced by Ripple so far is the lack of clarity around the regulatory status of XRP. The cryptocurrency project and Ripple are subject to multiple lawsuits alleging that XRP is an unregistered security.