US intelligence chief concerned about Chinese dominance in cryptocurrency

US intelligence chief concerned about Chinese dominance in cryptocurrency

November 26, 2020

US Director of National Intelligence John Ratcliffe wrote a letter to US SEC Chairman Jay Clayton earlier this month about concerns pertaining to the Chinese influence over cryptocurrencies. According to a report from the Washington Examiner Ratcliffe even offered to have the senior economic intelligence officials brief Clayton on the matter. For now, the SEC has not commented about the development following the official’s request. 

The letter in question seems to imply that SEC should implement rules that help US-owned cryptocurrency companies to compete against those based in and controlled by China. Especially since the Examiner learned that the letter was attached with another letter that Senator Tom Cotton, an Arkansas Republican, sent Clayton.

According to the report, Sen. Cotton’s first letter to Clayton asserted that there was a need for the SEC to “develop a clearer articulation of policy and, ultimately, formal Commission guidance addressing digital currencies,” which also hinted that the SEC must help US companies have the chance to lead. 

Cotton addressed the same topic in a follow-up letter in July 2020 which he sent to Ratcliffe and the White House national security adviser Robert O’Brien. He stated in the letter about how “so far the Commission has concluded that only two digital assets should be considered non-securities — Chinese-controlled Bitcoin and Ether.” Cotton went on to write: 

The continued lack of regulatory clarity not only hurts US-developed digital assets, it puts American national and economic security gravely at risk.

On November 12, President Trump signed an executive order that prohibited transactions between anyone in the US and companies linked to China’s military. At the time, reports speculated whether the executive order could apply to Chinese-linked crypto companies.

Moreover, an anonymous source told the Washington Examiner that there were “serious national security concerns” about China’s “control over Bitcoin and Ether and worried about  China trying to dominate the technologies” that “are going to decide who runs the world for decades to come.”

Recently, According to Deutsche Bank’s research, the race to issue a CBDC was led by Sweden and China which started CBDC pilot projects earlier this year. It also stated that governments played a “pivotal role” in supporting a digital payments infrastructure, and noted China’s active progress in the field. In fact the bank called on the US to “catch up” with the CBDC trend.

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