China’s growing influence in the digital currency space has got the US intelligence community on their toes as they see it as a threat to financial security. As per a recent report, the Director of National Intelligence John Ratcliffe wrote a letter to the Security and Exchange Commission (SEC) Chairman Jay Clayton expressing his concerns over China’s growing dominance in the digital currency space. Ratcliffe in the letter talked about the upcoming launch of China’s state-controlled national digital currency that could make it extremely difficult for US tech companies to compete.
Apart from the upcoming national digital yuan launch, the Director of National Intelligence also talked about China’s mining dominance where more than 60% of the cryptocurrency miners are based out of China which he believes could pose a threat to mining decentralization if the Communist Party in power decides to nationalize mining.
Bitcoin and digital currencies built on top of blockchain are being portrayed as the future of finance and most of the developed nations are already working on plans to launch their own national digital currency or CBDC. China is currently years ahead when it comes to the development of the national digital currency, as it is already running several pilot programs for its digital yuan which has been under development for almost 6 years now.
US Intelligence Department Seeks SEC’s Cooperation In Formulating Better Regulations
The letter by the Director of National Intelligence suggests the growing influence of cryptocurrencies and how superpowers around the globe are already gearing up to embrace the financial overhaul. This is even more critical for the United States because the US Dollar is seen as a reserve currency in the international trade market which offers flexibility to the Federal Reserves to print those extra dollars in times of financial crisis. It also offers a monopoly to the US to put sanctions on other countries.
A successful digital yuan could very well end the monopoly and take the superpower tag away from the United States, thus it poses a national threat. The government wants the SEC to work on formulating inclusive regulations to ensure an encouraging environment for US companies that can compete with Chinese dominance.