Trump Administration Concerned SEC Dragging Its Feet on Digital Currency as China Races Ahead

The photo shows a physical imitation of a Bitcoin in Dortmund, western Germany, on January 27, 2020. (Photo by INA FASSBENDER / AFP) (Photo by INA FASSBENDER/AFP via Getty Images)
INA FASSBENDER/AFP via Getty Images

There is growing concern within the Trump administration that Securities and Exchange Commission chairman Jay Clayton is not doing enough to counter growing Chinese dominance in digital currency, which will harm American companies wishing to compete in what is seen as the future of currency.

President Trump has moved aggressively throughout his tenure to respond to China’s attempts to dominate emerging technologies through a plan called “Made in China 2025,” which will determine things as critical as the future of the world’s manufacturing and communications.

But concern with Clayton has been growing for months about what the Trump administration sees as his counterproductive approach, as head of the agency that makes determinations on how the U.S. government regulates digital assets.

So far, under Clayton, the SEC has concluded that only two digital assets should be considered non-securities regulated under the Commodity Futures Trading Commission, which is a better regulatory environment than the SEC. Those two digital assets are the Chinese-controlled bitcoin and ether.

“The president has rightly identified China as our geopolitical foe and has smartly maneuvered to thwart their aggression through his trade negotiations, his rebuilding of the military, and his overall economic plan,” a senior administration official said.

“So when you look toward the future, digital currency is going to be a major front in the broader economic battle. We need to make sure the SEC is not putting American companies at a disadvantage because China is making a major play in the crypto-space.”

A senior intelligence official added, “Digital currency is a national security issue and what China has done to hold the majority of certain digital currencies is something that’s on our radar.”

China’s head start in digital currency could potentially put the Chinese Communist Party in control of the world’s payments and currency.

Earlier this month, China’s central bank has distributed brand new digital renminbi currency in several major cities to “lottery” winners who are already reportedly spending it at thousands of retailers, including supermarkets, pharmacies, and even Walmart, Axios recently reported.

In contrast, a group of Western central banks, including the Fed, issued a report last week detailing “foundational principles” for a potential digital currency.

“China is already test-driving the future of finance while the rest of the world is stuck trying to get its learner’s permit,” Axios’s Dion Rabouin wrote.

There is also mounting frustration with Clayton from Republicans in Congress, who see China racing to leapfrog ahead of the U.S. in this emerging technology.

Sen. Tom Cotton (R-AR) expressed his concerns about Clayton in a July 30, 2020, letter to the White House and the nation’s top intelligence official, obtained exclusively by Breitbart News.

In the letter to Director of National Intelligence John Ratcliffe and National Security Adviser Robert O’Brien, Cotton wrote, “The continued lack of regulatory clarity not only hurts U.S.-developed digital assets, it puts American national and economic security gravely at risk.”

Cotton said he first sent a letter to Clayton in December 2018 with his concern but received an unsatisfactory response. He said since then, “The threat posed to U.S. technological innovation by China since I first wrote Chairman Clayton has grown substantially more acute.”

He added:

In 2018, Chinese President Xi Jinping heralded the importance of blockchain to China’s future. Today, President Xi continues to push aggressively for Chinese dominance in blockchain, having recently stated in a speech to members of the Politburo that more attention should be paid to research and boosting innovation capacity “to help China gain an edge in the theoretical, innovative and industrial aspects of his emerging field.”

Our government should not voluntarily cede that ground by failing to create a level playing field for U.S.-based companies through the development of clear policy that allows them to compete fairly against foreign competitors.

The threat that our regulatory inertia poses to our national and economic security cannot be overstated and the time to act is now.

Breitbart News reached out to the SEC on Friday for a response but did not receive one by deadline.

Follow Breitbart News’s Kristina Wong on Twitter or on Facebook.

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