In general, most first world, western countries have been pretty amenable to digital currencies in helping create regulations that, while stringent, allow for innovation and the potential of the space to be reached. However, the same cannot be said about the US, a country that has approached this new space with a lot more scepticism and concern than most.
In fact, the ever-present on Twitter president, Donald Trump, even expressed his dislike of Bitcoin and other digital currencies in favour of the dollar, and therein lies the crux of the matter. The digital currency revolution that seems to be gaining momentum is one that comes at a price for the old guard.
Having a new digital currency revolution — be it Bitcoin or even central bank digital currencies — means that the power of the current head of the financial pile — the US Dollar — is threatened. The dollar is the global reserve currency, and affords the country many opportunities, and endangering that position is not in the best interest of Trump, or his entire country.
So much to lose
An analysts at JPMorgan Chase & Co. has also picked up on this fact as they state:
“There is no country with more to lose from the disruptive potential of digital currency than the United States.”
A new report from the major bank has outlined the disruptive potential of digital currencies, and also pinned who will be disrupted, and displaced, the most if they were to gain more traction.
The report’s authors — among them, JPMorgan’s head of U.S. interest-rate derivatives strategy Josh Younger and chief U.S. economist Michael Feroli — wrote:
“This revolves primarily around U.S. dollar hegemony. Issuing the global reserve currency and the medium of exchange for international trade in commodities, goods, and services conveys immense advantages.”
Working against them
It is unlikely that the likes of Bitcoin or other decentralised coins will rise to be the next global currency, but, the fear is that a digital revolution of finance enacted from governments could still damage the US hegemony.
As it stands, there are a number of mutterings of countries looking to build their own digital currencies which will be controlled by the central banks as a play to become more tech ready. This is not a big priority for the USA, which could be a problem especially considering China is the leader in this arena as it stands.