Due to China’s anti-free market mentality, the United States has an economic opening on financial technology, and we need to seize it.
China escalated its war on economic freedom by banning all crypto transactions in September. This is nothing new for one of the most authoritarian states in the world. China has pursued an anti-crypto campaign since 2013, ranging from banning third-party vendors’ ability to pay in cryptocurrencies to forbidding bitcoin mining. It comes as no surprise that China is against crypto because crypto stands for the free and open opportunity to pursue one’s financial future, a foundational American value.
Cryptocurrency promotes openness, transparency, privacy, and free markets. At its core, cryptocurrency employs blockchain technology to validate transactions in a decentralized way that dramatically cuts down on fraud. For example, it’s extremely difficult to track exactly where the $20 bill in your wallet has been once it left the U.S. mint. But using blockchain, digital currencies can be tracked from their creation all the way through to your digital wallet.
As Congress and regulators look to establish federal rules for cryptocurrency, the question remains, are we going to follow China’s lead, or are we going to promote American values by supporting this cutting-edge financial technology?
By declaring all virtual currency-related business activities illegal, China did two things. First, China again made it clear that they do not care about the ideals upon which crypto is built. They only care about authoritarian control. Second, China provided the United States with a huge opportunity. Just as the last ban on crypto mining led to a boom of jobs and economic development, America is at a crossroads. We can either be in the driver’s seat for the future of finance or allow other countries to outpace us.
Crypto and blockchains are built upon the foundational American value of free-market competition. This technology has the potential to mount a financial revolution that embeds innovations into the world’s economic fabric. To support access and economic activity, America needs to lead the world in innovation and ensure that our regulatory environment is hospitable to risk-takers. If America lives up to our open market principles, we will beat China’s authoritarian, communist system every single time.
Unfortunately, powerful voices in the United States have signaled a willingness to take the Chinese approach. Federal Reserve Chairman Jerome Powell told the House Financial Services Committee in July that if the Fed created a Central Bank Digital Currency, “you wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had a digital U.S. currency.” Thankfully, he backed off these comments after I pressed him for clarification on September 30th. Likewise, Securities and Exchange Commission (SEC) Chairman Gary Gensler had expressed openness to a larger federal role in regulating crypto, but he backtracked as well after I asked him to confirm his views on October 5th.
The development of crypto is the dawn of a new era in innovation, akin to the development of the internet. Congress and federal regulators embraced the invention of the internet in the 1990s, and it led to a transformed world with new possibilities for free expression and economic prosperity. What would have happened if we followed the Chinese model and banned or regulated tech innovators out of existence just as they began to get off the ground? That is the danger now facing blockchain technology.
We must stop trying to “out-China” China. Our country prospers when Americans have the freedom to innovate and experiment. The U.S. cannot take the Chinese approach that bans anything that increases freedom and access for its people. This technology is inherently transparent and empowers individuals to create a user-owned economy. It is the epitome of financial freedom, which is why China is seeking to clamp it down. Following in their footsteps would be disastrous and harmful. Instead, we need to approach crypto the American way: By embracing new technology and allowing innovators to create things that will better our lives.
• Theodore Budd is an American businessman and politician serving as a member of the United States House of Representatives for North Carolina’s 13th congressional district.