By Bill Taylor, Fintek Capital
Now that headline will probably come as a surprise to folks in the U.S. (if they care) but certainly not to the rest of the world. A recent Gallup poll revealed that only 2% of American investors owned bitcoin, so why should the other 98% of Americans care what is going on in “cryptoasset“ land around the globe? Well, because it means that the U.S (and its blind regulators) are falling behind the world in every facet of the most game-changing financial environment since………..ever.
The slogan “Make America Great Again” should read “Don’t Make America LATE Again”.
To be straight, we are not talking about falling behind places like the Cook Islands, Syria, El Salvador, Latvia (oh wait, the U.S IS behind Latvia) but rather China, Japan, Russia (yes, true) and Europe. Even places like Gibraltar, Singapore, Switzerland etc. are light years ahead in the adoption of cryptocurrencies and their financial uses.
Let’s take a look at what the European Parliament has set forth with a new analysis from its Committee on Economic and Monetary Affairs; “cryptocurrency can be used as an alternative to money”. Seems the Europeans have already done exhaustive studies on how crypto works and its potential impact on the global economy. Take a look at several quotes from their studies:
Crypto Alternative to Money:
“Digital currencies, also known as ‘virtual currencies’ or ‘cryptocurrencies’ can be defined as ‘a digital representation of value, not issued by a central bank, credit institution or e-money institution, which in some circumstances can be used as an alternative to money.
Their value is determined by the law of supply and demand, relying on potential exchanges for other goods or sovereign currencies, and it is not backed by any monetary authority (decentralised character). The supply (creation of new units) is often managed by computer algorithms, which help to create scarcity to maintain value. The common feature of the various digital currencies is the use of DLTs to manage value exchanges. Digital currencies management encompasses services such as cryptocurrency payments, cryptocurrency wallets, exchange and trading solutions for cryptocurrencies (cryptocurrency brokerage) and mining.”
Crypto Disrupts and Innovates:
“Other innovations with a relevant impact in the financial sector are the new cryptocurrencies, like Bitcoin, which are digital currencies that operate in a decentralised way by means of P2P technologies, like blockchain, and without participation or supervision by any central bank or institution. These cryptocurrencies offer technological and operational paradigms that are a source of disruption for the entire sector, including monetary policy and financial stability.
All these disruptive and innovative applications utilise new and emerging technologies, among which those stand out are AI, cloud computing, biometrics, digital identity, blockchain, cybersecurity, RegTech, internet of things (IoT), augmented reality, etc.”
Digital Currencies Issued by Central Banks:
“The arrival of permissioned cryptocurrencies promoted by banks, even by central banks, will reshape the current competition level in the inter-cryptocurrency market, broadening the number of competitors. A potential inadequacy of traditional competition policy to address competition issues in the cryptocurrency markets can be found, suggesting direct public participation through a central-bank digital currency as a remedy.”
Crypto is Challenging for Regulators:
“The international nature of cryptocurrency markets is also a challenge to competition policy at the European level. Many of the players operate from global locations outside the jurisdiction of European competition authorities, which makes investigation or prosecution on anticompetitive behaviours more difficult. Europe leads, at international level, the supply of wallet and exchange services, with 42% and 37% in terms of number of players. It is also the principal actor in payments (33%). Nevertheless, the main weakness of Europe is the concentration of the mining activity on non-European countries (Europe only captures just 13% of the current mining market). Mining is the most strategic, sophisticated and technology dependent activity in the cryptocurrency market, and there currently appears to be a significant concentration of mining activities occurring in certain Chinese provinces.”
Well, you get the cryptocurrency picture. Europe leads the world in several sectors, Asia in others and the U.S. in none. But hey, our 2% of investors are in bitcoin so we are trying. And U.S. regulators? Sigh! The SEC is still trying to define what cryptocurrencies are and then tackle how to regulate them. Until then, GO GLOBAL.
Bill Taylor is Managing Partner at Fintek Capital & a frequent contributor to FintekNews