On US Falling Behind China Regarding Blockchain Payment
A top executive of the first cryptocurrency fund in the U.S. has said that China is years ahead of the U.S. in terms of blockchain payment.
Pantera Capital CEO, Dan Morehead, told Yahoo Finance that he agrees that the U.S. system is falling behind China which has been leading with regards to crypto integration because the Asian giant has not been treating the emerging asset class with skepticism like US regulators.
“I think it is true. China is six years ahead of the United States in building a blockchain-based payment system,” Morehead said, pointing out that most entities would realize that blockchain is an asset class by itself and would have a blockchain team and allocation in two or three years from now. “It’s going to be a competition among nations to have the payment rail of the future,” he adds.
His comment comes in the wake of the view shared by the president of Queens’ College in Cambridge and Chief Economic Advisor at Allianz, Mohamed El-Erian, in which he wrote that Beijing seems to have understood the transformational power of the cryptocurrency revolution and has learnt to co-opt it in a holistic and highly directed manner.
El-Erian cites three factors shaping the future of crypto: the technologies driving the crypto revolution, including blockchains, are becoming more disruptive to the financial industry; cryptos are gradually becoming a larger part of investor portfolios; and are also somewhat more prevalent in the payments ecosystem.
He sees China’s development of better payments systems and the planned rollout of the digital yuan (e-CNY) as presenting a challenge to the west on crypto even as “the policy debate in western economies over crypto remains too narrow…”.
While blockchain is still an emerging technology and in an experimentation phase creating a sort of competition between countries, some experts have argued that the proposed rollout of China’s e-CNY is set to make the yuan more significant.
As the Chinese yuan is sixth in terms of value transacted but its proportion growing according to the China Academy of Information & Communication Technology which says that China’s digital economy now accounts for 38.6% of GDP in 2020, or 39.2tr yuan (US$6 tln), the experts suggest that the e-CNY will promote the yuan’s internationalization.
Ahead of China’s planned launch of the e-CNY in 2022, the U.S. and the EU have been discussing their CBDC initiatives with regards to China’s implementation phase.
A Federal Reserve Governor is concerned that other countries such as China are moving ahead with their CBDC while the U.S. is behind. Lael Brainard told the Aspen Institute Economic Strategy Group on Friday that she can’t wrap her head around the fact that the U.S. does not have a CBDC.
“That just doesn’t sound like a sustainable future to me,”Brainard said.
On the part of the EU, a Member of the Executive Board of the ECB confirmed in a recent interview that the EU has started work on a digital euro. Fabio Panetta said they are not starting because they “believe that the euro area is particularly vulnerable to the spread of a Chinese digital currency or the use of a private digital payment instrument” but to protect European monetary sovereignty.