US Leads China in ‘Space Race for Digital Currency’, Crypto Official Says
As the global race for digital currency intensifies, Circle CEO Jeremy Allaire believes the broader adoption of stable currency expected with regulatory clarity from Washington may give the United States a needed advantage to create the financial system of the future.
Testifying with five other crypto leaders at Wednesday’s landmark congressional hearing, the chief executive of the digital payments provider said the United States is beating China in stablecoin transactions with billions of payments backed by the US dollar, compared to the $ 10 billion supplemented by the central bank of China in its experimental digital yuan program, although clearer rules for mass use are needed to maintain this pace.
“It has the potential to grow at a very big rate around the world and benefit the US dollar and US businesses,” Allaire said. told lawmakers. “And I think the primacy and development of this infrastructure is a national security and economic priority for the United States, and we have to get there now.”
Despite larger transaction volumes, U.S. stablecoin issuers lack the key support from policymakers that is crucial for wider adoption, while China’s central bank has pushed forward testing of digital currencies in the real world. As the stablecoins market grows rapidly, reaching over $ 140 billion in November, major players are awaiting a nod from Washington as watchdogs move closer to support for institutional use.
“The United States and the US dollar are today winning the space race for digital currency,” Allaire, of which Circle is the second-largest stablecoin issuer, told members of Wednesday’s meeting, citing billions of transactions.
A central bank digital currency (CBDC) Atlantic Council tracker and database, a non-partisan think tank on international affairs, however, says the United States lags furthest behind in advancing digital currency among countries with the four largest central banks.
“In the long run, the lack of US leadership and norm setting can have geopolitical consequences, especially if China retains its pioneering advantage in CBDC development,” the Atlantic Council researchers wrote.
While Circle has speak out against the launch of a centrally managed CBDC – which differ from stablecoins because they are privately issued – the company backed the Biden administration’s proposal to regulate stablecoin issuers as banks, seeing the move as a step forward for the industry.
“We believe this represents significant progress in the growth of this industry,” Allaire previously told Yahoo Finance. “There is a real recognition that as these stable payment coins grow, they could expand across the Internet relatively quickly.”
“Viable means of payment”
Flagship financial institutions are also preparing for regulation and the potential for institutional use.
Bank of America (BAC) sees developments in the regulatory sphere around stable coins as a good thing for payment companies, recently identifying Mastercard (MA), Signature (SBNY), Visa (V) and Western Union (WU) as potential beneficiaries.
“We expect regulatory clarity to increase the use of stablecoins as a viable payment method, which will likely lead to retail adoption,” Bank of America global research analysts wrote in a recent note.
“Stablecoin regulation is an important first step towards a comprehensive regulatory framework that encompasses the digital asset ecosystem,” said BofA. “We see a comprehensive regulatory framework as a catalyst for mass adoption of digital assets. “
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on twitter @alexandraandnyc
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