Coinbase CEO Brian Armstrong Says Offshoring Crypto Hurts America’s Financial System

Though it has served us well for many years, the conventional financial system is getting older. It has reached the point where technology development offers the chance to make it quicker, more effective, and simpler, just like all systems before it. In an increasingly linked online world, technological improvements have modernized practically every industry we deal with, from cable to streaming, mobile phones to smartphones, and mail to email. excluding one.

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Although you may be able to bank online, the fundamental workings of the old banking system have remained essentially intact for at least 40 years. And it's beginning to affect Americans. According to the most recent study by Morning Consult, nearly seven in ten Americans think that the financial system requires significant reforms or a total overhaul. That's where cryptocurrencies and the blockchain technology that powers them both come into play. A financial system based on cryptocurrency is more user-controlled, private, efficient, and quick. The conventional financial system is not being replaced; rather, it is being updated. An upgrade that could expand economic freedom on a global scale and provide millions of previously unbanked people more power.

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While there are a variety of consumer advantages that crypto could offer the financial system, it's equally critical to realize the geopolitical advantages. Although other global superpowers are challenging the U.S.'s dominance, the U.S. has long been the dominant force in world economic and political affairs. For instance, China has advanced significantly in the field of digital currencies and has already introduced its own digital currency, the yuan. The EU has introduced MiCA, which aims to fill gaps in current EU financial services legislation by developing a standardized set of rules for crypto-assets and related activities and services. The U.K., Japan, and EU have also made substantial headway.

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The United States can modernize its financial system and strengthen its position as a geopolitical force by embracing cryptocurrencies and other forms of digital finance. Although the dollar has enjoyed years of being the world's reserve currency, pressure has never been greater. Think about a scenario where the US launches its own USD stablecoin on the blockchain. Millions of previously unbanked and underbanked people would now have access to the dollar, and it would serve as the de facto digital currency for remittances and international currency transfers, ensuring that the dollar continues to be the world's reserve currency both on and off chain. This was recently shown in Ukraine, when the United Nations High Commissioner for Refugees (UNHCR) used USDC to deliver help to those affected by the local strife.

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America is at a pivotal time in its history where we can either seize control of the digital currency market and benefit from the advantages that come with it, or we can lose control to geopolitical rivals who are eager to assume the role of the world's preeminent power in the twenty-first century. The United States runs the risk of slipping behind politically and technologically as other nations create rules and regulations for cryptocurrencies.

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Because I think America should lead the way as the internet's architecture develops into the next generation of the financial system, I decided to launch Coinbase here in the United States. For more than ten years, Coinbase has pushed for transparent regulatory frameworks for the cryptocurrency industry. But although we observe advancement in other jurisdictions, the U.S. is more preoccupied with turf wars between regulators. No other nation in the world has expended as much time and effort persuading its people that cryptocurrencies are securities. The United States cannot see the forest for the trees.

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We simply need to look ahead until the middle of 2020 to observe the effects of outsourcing innovation. When it comes to creating new technologies, businesses like Intel and IBM once led the way in the U.S. semiconductor industry. However, a number of variables combined in the 1980s and 1990s to cause an industry transition, with semiconductor manufacture rapidly shifting abroad. We are currently feeling the effects of chip shortages, which have had an impact on every sector of our economy, including the automotive, healthcare, and supply chains. We must apply these principles and keep innovation domestic.

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The U.S. government needs to be more proactive when it comes to cryptocurrencies and offer a clear regulatory framework for the sector, one with regulations that look to the future and take into account the numerous distinctive and ground-breaking features of blockchain technologies. This would improve the stability and security of the bitcoin market, attracting more investment and talent to the US.

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We can't do it alone, but businesses like Coinbase are paving the way in fostering innovation and building a safe environment for cryptocurrencies to flourish. The moment has come for the United States to act and create a complete regulatory framework that safeguards users, supports innovators, and allows the American people access to a financial system designed for the 21st century.