US is losing 'tech cold war with China' says Ripple co-founder

Speaking at the LA Blockchain Summit conference on October 6, Ripple co-founder, Chris Larsen, slammed the United States for falling behind in the race to design “the next generation of the global financial system.”

The address expanded on some of Larsen’s frustrations with U.S. regulations that has led to the company considering moving to a different jurisdiction.

Larsen argues the U.S. has fallen “woefully behind” in the ongoing “tech cold war with China,” asserting that China’s central government has outpaced American lawmakers in providing legislative clarity, allocating resources, building infrastructure, and fostering innovation in blockchain and other emerging technologies, including big data, surveillance, and A.I.

“China has recognized that those technologies are the keys to who is going to control the next gen financial system [...] SWIFT and correspondent banking is not going to be the system we are going to be living with over the next two decades.” 

The Ripple co-founder emphasized the failure of the United States to embrace initiatives to digitize the dollar, noting that China is “way ahead on a central bank digital currency” (CBDC). Larsen added that a CBDC will allow China to “spread the yuan globally” and undermine the dominance of the U.S. dollar in international markets.

Earlier this week, People’s Bank of China deputy governor Fan Yi Fei revealed the central bank has already settled more than $162 million worth of domestic transactions through its Digital Currency, Electronic Payment (DCEP) pilot program

Larsen stated that Chinese regulators have been far more adaptive than their U.S. counterparts and argued that the Securities and Exchange Commission (SEC) should recognize that blockchain is a critical battleground in the technological arms race with China, instead of maintaining t exclusionary policies that were designed to stop the initial coin offering (ICO) craze of 2017.

Larsen also warned of the dangers of China’s dominance in cryptocurrency mining, asserting that “proof-of-work mining is controlled by China” and Chinese miners are “under the control of the Chinese Community Party.”

“Miners are masters. They can rewrite history if they want. They can block transactions.” 

Ripple’s executive chairman described the SEC’s policies as favoring proof-of-work protocols, consolidating China’s grip over the global crypto sector.