Tag: us regulators

Ripple CEO Urges US Regulators to Embrace Crypto as Country Risks Falling Behind China

Brad Garlinghouse, Ripple CEO, recently said that the US regulators should listen to the crypto sector, particularly after news shows that China is approaching the launch of its own digital currency. Garlinghouse is the CEO of Ripple Labs, crypto and blockchain company, behind the world’s third-biggest cryptocurrency XRP by total market value.

Garlinghouse posted a comment on Twitter saying that currently is the perfect time to enter the digital money industry. He mentioned that the US lags behind and is being pushed out of competition as China is becoming stronger day by day in cryptocurrency and fiat payments. He revealed that the US regulatory authorities have stood still for too long, stating that now is that time to improve and promote innovation.

US Risk Losing Competitiveness

Brad Garlinghouse disclosed that as the US remains disinterested in the innovation of digital currencies, China’s grip on both fiat and crypto payments becomes stronger. US congressional members received calls on the digital dollar, but nobody from the government or the Federal Reserve has yet made a positive response. Garlinghouse has, therefore, criticized the attitude of the US.

Garlinghouse once again calls on the US regulators to embrace blockchain and cryptocurrency innovations as the nation is lagging behind China in terms of the digital currency and blockchain innovation. China has continued making significant progress in the development of its digital yuan, to the extent of carrying out real-world pilot tests of its Central Bank Digital Currency (CBDC) in some cities. Such digital currency trials involve partners such as Starbucks, Subway, and McDonalds and are being conducted in four major cities of China.  

As the US trade tension with China hitting a fever pitch, Brad Garlinghouse is urging US regulators to lean into digital currency innovation so that to be able to compete with China. The digital currency initiative has been in the works for more than five years now, and China’s central bank is getting closer to make it a reality.

Garlinghouse said that China’s digital currency will have a major impact on the global economy. Many industry experts also believe that China’s digital currency could be a real threat to the already weakened global dominance of the US dollar. In China, more than 1.2 billion people or more than 80% of the population already utilize their smartphones to pay for goods and services digitally.

China can use its digital yuan to achieve faster remittances and far-reaching improvements at home. But a true sense will become when China brings the digital currency into business and economic relations with foreign nations.

In the recent past, Bitcoin bull and multiple billionaire Mike Novogratz also criticized that the US will lose the leadership in the fintech and blockchain area if the local regulatory authorities continue opposing innovations in this area. Already, China’s president has emphasized on many occasions that the use and acceptance of digital assets and blockchain will be crucial for the nation’s continued supremacy.

Ripple Expands Global Regulatory Team and Joins Blockchain Association 

Garlinghouse has been a strong advocate of regulatory clarity in the cryptocurrency industry, particularly for Ripple’s cryptocurrency, XRP. An earlier report showed that Ripple Labs was the initial crypto-related firm to open an office in Washington, DC so that to develop closer relations with lawmakers (local regulatory authorities). In October last year, Ron Hammond, Michelle Bond, Susan Friedman (former senior advisor to CFTC), and Craig Phillips (former advisor to the US treasury department) joined Ripple’s board of directors. Ripple included these prominent leaders into its board of directors to help the San-Francisco-based blockchain and crypto company to offer a unified voice that would assist in building close partnerships with financial institutions, regulators, politicians, and executives from the fintech industry to drive forward blockchain and crypto adoption.  

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US Crypto Crackdown Could Stifle Innovation and Weaken Dollar

The US government’s ongoing crackdown on cryptocurrencies and crypto firms is causing concerns among industry experts, who argue that it could have a negative impact on innovation and weaken the dollar’s global position. The recent Wells notice issued to Coinbase by the SEC is just one example of the legal threats that crypto firms are facing in the US, and many believe that there could be more to come.

According to Mati Greenspan, the chief of crypto research firm Quantum Economics, US regulators have been unfriendly to crypto “since the beginning.” Some suggest that the recent collapses of crypto and startup-friendly banks, such as Silvergate, Silicon Valley Bank, and Signature Bank, are part of a larger scheme by regulators to “un-bank” the crypto sector, which has been dubbed “Operation Choke Point 2.0.”

Meanwhile, a March 20 economic report from the White House was highly critical of the merits of crypto assets, spending almost an entire chapter debunking their “touted” benefits. However, as more people begin to use crypto for cross-border remittances globally, there are concerns that a crackdown on crypto in the US could actually have the opposite effect on the dollar. By isolating the US further, it could weaken the dollar’s position as the global reserve currency.

Greenspan suggests that the White House should instead review the practices in the banking industry, rather than targeting the crypto sector. The recent action against Coinbase has been described as part of an “adversarial environment for the crypto industry” in the US, which could drive jobs, investment, and future innovation offshore to countries like Singapore, Hong Kong, and Australia.

Despite the concerns raised by industry experts, the exact reasons for the SEC’s targeting of Coinbase remain unclear. The SEC has declined to comment on the matter, leaving many in the crypto community uncertain about what the future holds for the industry in the US.

US Crypto Crackdown Hurts USD Coin

In an interview with Bloomberg TV, Circle CEO Jeremy Allaire stated that the US regulatory crackdown on cryptocurrencies has been a significant factor behind the decreasing market capitalization of USD Coin (USDC). The regulatory scrutiny on USDC comes after the collapse of the FTX exchange, a banking crisis, and USDC’s depegging.

The USDC depegged in March due to the US banking crisis, which caused Circle’s $3.3 billion worth of USDC reserves to be stuck with Silicon Valley Bank, one of the three crypto-friendly banks that were shut down by regulators. Although Circle had assured its customers that it had the backing from investors to fill the gap, the news caused the market to react quickly, and USDC depegged from the US dollar.

At its peak, USDC had a market cap of $56 billion, placing it right behind Tether-issued USDT. However, since the banking crisis and USDC’s depeg, the stablecoin’s market cap has been reduced nearly by half, currently sitting at $30.7 billion.

Circle CEO Allaire has also raised concerns that the lack of regulatory clarity in the US may force crypto companies to seek opportunities overseas. With the recent passing of the Markets in Crypto-Assets Act (MiCA) by the European Parliament and the push for adoption by Hong Kong, Allaire believes that the US will be left behind.

Allaire has called for Congress to step up, stating that it is a critical moment for the US. The US Securities and Exchange Commission (SEC) led by Gary Gensler has been on an enforcement spree since the FTX collapse saga. The SEC has threatened regulatory action against multiple crypto platforms and exchanges.

During the oversight hearing on digital assets, Gensler faced pushback from policymakers, and many crypto proponents have also questioned the authority of the SEC and Gensler. The regulatory environment in the US has caused uncertainty and concern, leading to a decline in the market capitalization of USDC.

In conclusion, the regulatory crackdown on cryptocurrencies by US regulators has been a significant factor behind the decreasing market capitalization of USDC. Circle CEO Jeremy Allaire has raised concerns about the lack of regulatory clarity and the US banking system’s global reputation. The passing of the Markets in Crypto-Assets Act (MiCA) by the European Parliament and the push for adoption by Hong Kong have put the US at risk of being left behind in the crypto industry. Congress needs to step up and provide regulatory clarity for the US to remain competitive in the evolving crypto landscape.

US Bank Failures Shock Regulators

Regulators in the United States have been prompted to re-evaluate their supervision after the high-profile failures of Signature Bank, Silicon Valley Bank (SVB), and Silvergate Bank. The New York Department of Financial Services (NYDFS) and the US Federal Reserve Board have both published their internal reviews on the handling of the failures, which occurred in March.

SVB was closed by California regulators on March 10, and Signature Bank was moved against by the NYDFS on March 12. Silvergate Bank had announced its voluntary liquidation on March 8, setting off runs on the banks. The string of bank failures sent shockwaves through the financial industry, with U.S. President Joe Biden even feeling the need to tweet a response.

The Fed review of SVB’s failure found that the bank’s management failed to manage its risks, and supervisors “did not fully appreciate the extent of the vulnerabilities” of the bank as it “grew in size and complexity.” The report noted that “SVB’s foundational problems were widespread and well-known.”

The NYDFS review of Signature Bank’s failure highlighted areas where the regulator’s supervision could have been more effective. The report noted that the bank’s risk management and compliance programs were not adequate, and that the bank had a “lack of clarity” on its risk appetite.

The failures of these banks have prompted US regulators to re-evaluate their supervision of financial institutions. The NYDFS and the Fed have both acknowledged the need for improvements in their supervision and have pledged to take action to strengthen their oversight.

The failures have also raised concerns about the risks associated with banks that are friendly towards cryptocurrency. Both SVB and Silvergate Bank were known for their crypto-friendly policies, and some have speculated that their failures may be linked to their exposure to the volatile cryptocurrency market.

Overall, the failures of Signature Bank, SVB, and Silvergate Bank have highlighted the need for stronger regulatory oversight of financial institutions. While the NYDFS and the Fed have acknowledged the need for improvements in their supervision, it remains to be seen whether these improvements will be enough to prevent future bank failures.

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