US Rep. Mike Gallagher says “We Need to Ensure American Cryptos become the Global Standard” Not China’s Digital Currency

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China’s race to become the first central bank to issue its own digital currency has caused other countries to work on their digital currencies as well.

Most recently, Japan has announced its plan for a digital yen in retaliation to digital yuan. Experts are also calling out for a digital dollar, with Ex-CFTC Chair Christopher Giancarlo setting up an organization to look into the framework and the potential for a digital dollar.

Congressman Mike Gallagher (R-WI8) has also come in support of this idea as he wrote on Twitter,

“Just like we cannot let the CCP build the world’s telecommunications networks, we cannot let the CCP build the digital currency of the future either. We need all hands on deck to ensure American cryptocurrencies become the global standard.”

Gallagher was also the co-chair of the bipartisan Cyberspace Solarium Commission charged with developing an all encompassing approach to empower the US to address the cybersecurity challenges.

In Dec. 2018, Gallagher introduced a bill, Blocking Iran Illicit Finance Act, where he called for a report on Iran’s efforts to create a sovereign cryptocurrency that could be used to evade economic transactions just like Venezuela’s petro.

China taking the leading position

While many are calling for a digital dollar, in Dec., US Treasury Secretary Steven Mnuchin said he and Federal Reserve Chairman Jerome Powell doesn’t see the need for the Fed to issue a digital currency in the near future, the next five years.

Meanwhile, China has made digital currency its key innovation goal as in Oct., President Xi Jinping said that they need to “take the leading position” in the blockchain field and “seize the opportunity.”

He added that China “must take blockchain as an important breakthrough for independent innovation.”

After five years of research, China is also ready to test its central bank-issued digital currency (CBDC). And experts believe this could challenge the supremacy of the US dollar.

As we reported, Deutsche bank’s latest report observes that developing electronic, and crypto strategies could be the “epicentre of global economic power could shift.” The CBDC could also be used by the country as “a soft- or hard-power tool” and if China forces tech companies doing business in the country to adopt the digital yuan, “it will certainly erode the dollar’s primacy in the global financial market.”

But with a currency with ‘controllable anonymity’

China has been racing to get the complete design of its digital currency to work and is reportedly preparing for its first pilot test. This urgency could have been driven by social media giant Facebook, with nearly 2.5 billion users globally, working on its own digital currency Libra, announced in June last year and currently facing regulatory hurdles.

“China is moving quickly to launch a similar idea in the coming months,” Facebook CEO Mark Zuckerberg told a House committee in October. “If America doesn’t innovate, our financial leadership is not guaranteed,” he said.

Martin Chorzempa, a research fellow at the Peterson Institute for International Economics says People’s Bank of China is “definitely one of the most advanced central banks in the world in thinking about and moving forward on this issue (CBDC).”

However, China’s digital currency would function more like paper money than a cryptocurrency like Bitcoin. The idea here is to monitor every transaction, offering ‘controllable anonymity,’ which Chorzempa said, “is one of the most Orwellian statements one could think about.”

Digital currencies that as Deutsche Bank said have the potential to “revolutionize payment standard,” is surely the way of the future that can also trigger an upheaval in the global financial system.

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