The U.S. against China – A battle for global trade supremacy fought on the backs of cryptocurrencies through contrary regulatory approaches

At the same time that China has launched its intense crackdown on #cryptocurrencies, in the U.S., Corporate America appears to be welcoming crypto, and liberal regulatory approaches seem to be on the rise.

#cryptoregulation in the two biggest economies of the world appear more and more to be a proxy for the struggle between two social and political systems for trade supremacy: There, China’s autocratic system striving for complete control, significantly steered by the PBOC (People’s Bank of China), and here the liberal system of the U.S., which relies on a balance between pragmatic financial market regulation and innovation protection.

China’s mission in this context is clear: Introduce the #DigitalYuan as the de facto currency and longer-term as a means to limit the world’s reliance on the U.S. dollar in (cross-border) trade in general. Hence, China cannot like #crypto. It’s not a sovereign currency, it is beyond the Chinese government’s control, bottom line it is an instrument designed for #decentralization and #disintermediation. It is therefore only logical if the Chinese central government undertakes radical regulatory measures against crypto as has been observed in recent months, curbing, if not outright banning cryptocurrency mining and trading.

While the impression is solidifying that the mining ban is also to enforce the country’s carbon neutrality goals (non-crypto industries are also affected) it remains unclear where the country actually wants to head in the medium term regarding cryptocurrency. In a recent article by @AndrewSinger in #Cointelegraph, which I recommend to read (https://bit.ly/3j8GvUB) exciting insights are given into possible considerations of the Chinese government. Officially, the PBoC re-iterated last Saturday to keep pressure on crypto market and crypto and – more specifically – stated to also supervise financial platform companies, after it had imposed a series of regulatory actions targeting monopolistic behavior at online payment platforms like Ant Group Co. as per Bloomberg (https://bloom.bg/3xcs46U).

So, at least for the time being, the course of China seems to be carved out.

On the other hand side, Corporate America’s Bank heavyweights like Goldman Sachs, JPMorgan, Citigroup or State Street are increasingly pursuing a crypto-friendly course and gradually offering crypto services to their customers. While these are only initial and rather tentative steps, they are nonetheless decisive ones. They suggest that the U.S. financial sector is beginning to accept that cryptoassets like #Bitcoin and #Ethereum are here to stay. And this cannot be underestimated also from a regulatory point of view. Northern America is behind the curve when it comes to laying solid grounds for the crypto market and its regulation as already stated in some of my previous blogs (https://bit.ly/3Adb5U7). The longer the U.S. regulator(s) delay to come up with a crypto-specific framework, the harder it will be to syndicate rigid regimes as acceptance from the industry and folk / Congress might diminish.

In such direction aims the most current proposal of Congressman @DonBeyer, who introduced the Digital Asset Market Structure and Investor Protection Act last Week. That bill has the objective to both, protect consumers and promote innovation by incorporating digital assets into existing financial regulatory structures. In particular, it seeks to delineate the treatment of #cryptoassets under five securities acts, the Commodity Exchange Act and the Bank Secrecy Act, as well as Federal Reserve treatment of #stablecoins and possible digital legal tender.

With that bill, an imperatively needed crypto-specific taxonomy would be outlined, a clear governance between the different currently heavily intertwined authorities defined (e.g. the #SEC, #CFTC, #OCC) and ultimately a likewise flexible as effective regulatory and legal crypto-framework shaped. The regulation would limit itself to leverage existing laws for the crypto-space and only as need be to leave the required space for innovation, an approach by the way the small and likewise liberal as crypto-friendly country #Switzerland has chosen with its #DLT-law enacted early this year.

History has proven that moderate regulation has always prevailed over bans and prohibitions.

If this or a similar law could be enacted rather sooner or later in the U.S., a – if not the – major white spot in the global regulatory crypto landscape could be filled and a major puzzle piece in #cryptoregulation achieved.

Exciting times, more to come, stay tuned …

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