The U.S. needs to embrace privacy-focused crypto in order to compete with China’s digital RMB.
Co-founder and managing partner at Electric Capital, Avichal Garg, is convinced the only way for the U.S. to catch up with China in the digital currency war is by embracing privacy-focused cryptocurrency.
According to Garg, the Chinese are already far ahead of the U.S. in the digital currency race – their DCEP, or Digital Currency Electronic Payment, is due to launch by the end of the year. That is why developing a US digital dollar might not be enough to compete, given the long time it will take to develop it.
“The Chinese system […] is going to be out in the market for 5 to 10 year before the U.S. gets its own alternative out.”
Instead of developing its own product, Garg argues, the U.S. government should support already established USD-based stablecoin initiatives such as USDT.
By easing regulation around these stablecoins – which are pegged to the U.S. dollar and are under U.S. jurisdiction – the U.S. will be able to use them as proxies to compete with China on the digital currency market.
“In 12 to 24 months, I think they could basically greenlight all of these crypto hybrid dollars.”
Still, Garg is convinced that the U.S. is likely to be defeated if it competes with China on the mere technology side. Ultimately, In order to gain a competitive hedge, the U.S. needs to offer what an authoritarian regime like China cannot offer, which is privacy-focused, censorship- resistant digital currency.
To do so, the U.S. should join forces with the crypto community and empower those crypto networks codifying democratic values.
“The best way for them [the U.S] to compete is to actually embrace the best features of cryptocurrency and really push these as sort of an offensive tool against the Chinese.”
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