The United States’ intelligence community has raised concerns over China’s continued dominance in the digital currency space. The U.S. Director of National Intelligence (DNI) believes that China’s recent moves, especially with the digital yuan, pose a threat to the United States.
According to a report by the Washington Examiner, DNI John Ratcliffe wrote a letter to the outgoing Securities and Exchange Commission (SEC) chair Jay Clayton earlier this month on China’s digital currency rise. In his letter, Ratcliffe pointed to China’s dominance over the block reward mining sector, with over 60% of BTC miners residing in the Asian country.
Ratcliffe also pointed to China’s recent rise as the CBDC powerhouse with its digital currency electronic payment (DC/EP) development. The country has already started pilot testing the digital yuan in major cities, with the official rollout expected by the 2022 Beijing Winter Olympics.
According to the DNI, these developments pose a serious threat to the United States.
Ratcliffe’s sentiment build on the Trump administration’s ‘war’ against China, with the two superpowers being engaged in longstanding trade wars. Last month, Trump issued an executive order that prohibits U.S. citizens from transacting with a host of companies linked to China’s People’s Liberation Army.
According to one senior intelligence official, BTC falls into this category as it’s controlled by Chinese miners. Speaking to the Washington Examiner, he stated:
“The president’s recent executive order made abundantly clear the threat posed by securities investments that finance Communist Chinese military companies. Digital currency controlled by the CCP could certainly fall into that category. […] We cannot allow China to dominate the technologies and innovations that are going to decide who runs the world for decades to come — from artificial intelligence to digital currency, and everything in between.”
Ripple Labs’ general counsel Stuart Alderoty reiterated these views. Speaking to the outlet, Alderoty claimed that data indicates “a vast majority of BTC’s network / infrastructure — chips, mining pools, software — are all located in China or created by Chinese companies.” He believes that this is just the start of China’s domination over the U.S unless the government intervenes.
He stated, “Is the U.S. really willing to allow China to win this new technological and economic Cold War and, with it, allow China to dictate important parts of a new global payment system?”
According to the intelligence official, U.S. regulators are the biggest impediment to U.S. digital currency dominance. These regulators, starting with the SEC, must formulate policies that allow American companies to compete with Chinese rivals.
The SEC chair is yet to respond to Ratcliffe’s letter. However, this may be someone else’s issue to handle, with Clayton set to step down at the end of the year.