Regulating crypto in the US is a matter of national security, says Brian Armstrong.
For Coinbase CEO Brian Armstrong, 2023 has been a year of regulatory frustration and advocacy. And rightfully so. Over the past two months, the US Securities and Exchanges Commission (SEC) has made it clear that it’s in no rush to regulate the crypto industry, arguing that DeFi systems must comply with existing policy rules.
SEC Chair Gary Gensler famously said “there’s nothing about a new technology that makes it non-consistent with the public policies that congress has laid out”. So, instead of regulating, the SEC will continue with enforcement action.
In a special op-ed on MarketWatch, a defiant Armstrong implored the US to reconsider its hardline stance on crypto in the name of national security.
“The cryptocurrency market has had some recent turbulence,” he wrote. “That might make it tempting for policy makers to write it off as an unstable asset class. But they’d be missing the bigger picture. Failing to see that crypto is about much more than individual transactions risks America’s time-honored role as the global financial leader and an innovation hub.”
In refusing to regulate effectively, Armstrong argues the SEC is driving the crypto industry off-shore into the hands of the US’s most “ambitious adversary” – China.
Two Chinese tech behemoths, Alipay and Tencent, now offer integrated payment systems with direct, instant access to an array of services, and they’re scaling rapidly.
Armstrong wrote: “With the recent launch of its digital yuan, China aims to directly challenge the U.S. dollar and its role in global commerce. Given these moves and China’s strategy to leverage financial technology to project its own national interests, it should come as no surprise that Hong Kong is positioning itself as a global crypto hub.”
In April, the Chinese city of Changshu announced it will start to pay public sector employees in the country’s central bank digital currency (CBDC) in May, driving Chinese digital currency stocks up by 13% in a few hours.
Regulating 10 years down the line will be too late.
While the US has stalled on regulation, other financial centres outside of China are gearing toward a blockchain future.
Europe has introduced the landmark MiCA legislation – the world’s first comprehensive crypto framework – the UAE has a dedicated crypto freezone and a growing number of countries accept Bitcoin as legal tender.
As Armstrong illuminates, blockchain technology is not a financial service – it’s a “transformative technology that can revolutionize a wide array of sectors, of which financial services is just one example”.
“If we fall short today, the next generation of Americans will pay the price,” he said. “We’re spending billions today to repatriate technologies like semiconductors and 5G infrastructure. We should learn from that mistake. Bringing crypto and blockchain innovation back to the U.S. in a decade from now will require a colossal and sustained effort that may not succeed. But we can save ourselves that struggle if cooler heads prevail and we work together. Let’s modernize our financial system and reaffirm our role as a global technology leader rather than abdicating it.”
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