Coinbase CEO Brian Armstrong argues that the digital currency from China's central bank (CBDC) will pose a threat to the US. Armstrong sees the CBDC as a development that will weaken the reserve currency of the United States in the long run.
As the crypto entrepreneur points out, these concerns have already been discussed with heads of authorities and lawmakers.
Background: Brian Armstrong met with Jerome Powell and Paul Ryan two months ago, on 11 May. However, the meeting was not made public until Powell's meeting schedule was released last Friday, 2 July 2021.
According to it, the meeting between former Speaker of the House Paul Ryan, Coinbase CEO Brian Armstrong and Chairman Powel lasted 30 minutes.
The meeting took place before the Federal Reserve announced the upcoming release of a "discussion paper" on CBDC (Central Bank Digital Currency).
At the moment, no one can say why the former Rep. was there. Now works with Solamere Capital - an investment firm that deals in private equity.
Brian Armstrong in conversation
The meeting schedule, which was later released to the public, did not indicate what topics were discussed. But tweets from Armstrong suggest that the meeting was intended to clear up doubts among lawmakers about cryptocurrencies such as Bitcoin or Ethereum - and to gain more insight into the regulatory issues surrounding the technology.
In his tweets, the Coinbase CEO mentions that he has expressed his opinion about the CBDC testing China.
China had begun testing the digital yuan on 1 and 5 May, when consumers were given ¥55,000 (£6) to make purchases with. But even before the May test, China had devised a strategy to have 500,000 consumers in 11 regions participate in the test.
First, consumers had to download an app to get a wallet to spend the digital currency and get some discounts at participating shops in the process. The results of these tests were positive.
Brian Armstrong now says that China's digital currency is a threat to the US.
Therefore, Armstrong argues: The US needs to be quick in creating its own digital currency or there will be an immediate threat to the Federal Reserve.
After voicing his concerns in the meeting, Brian Armstrong later announced that the US will start researching the implementation of a CBDC.
Will the US issue its own central bank digital currency?
Earlier, on 19 October 2020, US Federal Chairman Jerome Powell had stated that the US should issue a CBDC. He was speaking on this International Monetary Fund panel on "cross-border" payments.
Powel, the chairman at the time, stressed the need to focus primarily on executing the CBDC properly - and not necessarily being the first country to introduce it. Nine months later, Powell is still stressing this. In May, however, the chairman mentioned plans to publish a discussion on CBDC and digital payments in the summer of 2021.
While the US has yet to publish the paper, China's pursuit of its own CBDC is gaining credibility. But, as Powell said, it's not about doing it first - it's about doing it right.