Coinbase vs. US Government Crypto Policy: A Matter of National Security
Recently, Coinbase, one of the largest cryptocurrency exchanges in the world, has been facing a lot of trouble due to the US government’s crypto policy. In particular, the US Securities and Exchange Commission (SEC) has been cracking down on the industry, which is why Coinbase has decided to sue the SEC. In a plea to the government, Coinbase CEO Brian Armstrong declares that good crypto policy is a matter of national security.
US Hinders Crypto Innovation
Coinbase CEO Brian Armstrong believes that the United States should put its best foot forward in adequately regulating the market, instead of allowing regulatory authorities to continue to apply the current restrictive policy. According to Armstrong, the US is a global leader in the financial sector. But that could change if the country continues with current policies. The government is forcing innovation to move abroad. Many companies are moving from the US to Europe, according to a survey by a European investment fund. The share of all venture capital that ends up in the US is also much smaller.
The Importance of Good Crypto Policy
According to Coinbase’s CEO, the twentieth century has become the “American century” because technology has driven the financial system. With cryptocurrencies, these two become even more closely connected. Armstrong thinks crypto and blockchain are the epitome of (financial) innovation. Therefore, the US must ensure that it doesn’t lag behind in the crypto market because if it does, it could lose its dominant position and become vulnerable to cyberattacks.
Chinese Dominance is the Danger
Where the US fails, China is taking over, argues Armstrong. Because both the Chinese government and Chinese companies are not standing still. For example, Alipay and Tencent already enable instant payments, while the US banking system is still slow and limited to bank hours. China is also well underway with the digital yuan, or China’s Central Bank Digital Currency (CBDC). This is how civil servants are now paid in it. Meanwhile, the same project in the US is still in the development phase. China could also start using the ‘eCNY’ in international trade. That could threaten the US dollar.
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If the US government’s crypto policies were less extreme, it would bring innovation to US territory. That is good for the US, and less favorable for China, Armstrong thinks. In addition, America does not only have China as a competitor. Countries such as the United Kingdom, Japan, Singapore, and the European Union also want to be important crypto hubs. So, the US has a lot to lose.
The US government must acknowledge that cryptocurrency is the future of finance, and it must have robust regulations in place to ensure its growth within US borders. Innovation is the key to becoming a global leader in this industry, and the US must act now if it wants to maintain its dominant position. The US government’s aggressive approach towards regulating the crypto industry has backfired, pushing many companies abroad. The US must find a way to rectify this policy before the country stands to lose out on future financial innovations that are changing the world.