On Tuesday (October 6), Chris Larsen, Co-Founder and Executive Chairman of Fintech firm Ripple, said that his firm is considering moving its headquarters from San Francisco, California to a more crypto-friendly jurisdiction in Europe or Asia.
Larsen’s comments came during an interview with Fortune reporter Jeff John Roberts at the [virtual] LA Blockchain Summit.
Below is a partial transcript of Larsen’s comments during this interview:
“Well, unfortunately, I think the U.S. is woefully behind in kind of stepping up to what is going to be the next generation of the global financial system…
“We’ve been in this incredibly fortunate position where the US has been the steward of the global system with 20% percent roughly of global GDP but in dollars it makes up like 80% of all trades… might be even more than that…
“That is a great position to be in. It’s incredible privilege, and it has really benefited all Americans, but we are being challenged in a major way.
“First of all, we have to talk about China. I mean, we are in a tech cold war with China, and that goes across the spectrum whether it’s kind of communication, surveillance, big data, AI, but also blockchain and digit assets, and the reason is because China has recognized that those technologies are the keys to who’s going to control the next-gen financial system.
“And we all know that the financial system we have today is creaky, it’s all from the 70s… SWIFT and correspondent banking is not going to be the system we’re going to be living with over the next, you know, two decades — way too slow, error-prone, it’s too closed off, it’s too expensive, and China is just itching to be the one that designs this next system.
“They’ve committed $1.4 trillion to a variety of technologies and blockchain is right on top of the list. And you go down the inventory of where China is today — it’s impressive. They are doing a great job. Nothing against China — we [have] got to admine what they have done.
“I mean almost ubiquitous digital payments domestically… incredible numbers, right? That sets them apart from where we are. They are now way ahead on a central bank digital currency: the digital yuan. That’s setting them up now to help spread the yuan globally. Huge advantage there.
“They control mining. You know, all the Proof-of-Work mining is controlled by China. You look at Bitcoin mining — it’s about 65% controlled by Chinese miners… Does anybody have any questions that a Chinese miner is under the control of the Chinese Communist Party? No way — absolutely not.
“Miners are masters, right? They can rewrite history if they want. They can block transactions. So huge advantage there…
“Compare that to where the U.S. is. We don’t have the digital dollar even though folks like J. Christopher Giancarlo [ed: former CFTC chairman] have recommended that. We need to get on top of that. We need to do a much better job of capital markets, regulators, Silicon Valley like cities… Working together like they do in so many other countries.
“And then finally, you know, I just have to have to say it — you know, in the U.S., all things blockchain, digital currency, they start and end with the SEC. You got to give the SEC credit. They faced a terrible ICO problem in 2017 and it needed to be stopped.
“They stopped it, and they should be admired for that, but that was has finished and now we’re in this tech cold war with China and instead of pivoting to encouraging U.S. innovation to keep up, they’ve done the opposite: they gave Bitcoin and Ethereum a pass — Proof-of-Work systems; that benefits China weirdly, but everything else is still in limbo or worse kind of being regulated through enforcement.
“And the message there is digital currencies are not welcome in the U.S. [If] you want to be in this business, you probably should be going somewhere else.
“To be honest with you, we’re even looking at relocating our headquarters to a much more friendly jurisdiction, you know, lots of them — UK, Switzerland, Singapore, Japan — and that’s a shame. So, we’ve got to change up here, or we’re going to lose our leadership, stewardship, of the global financial system. That would be a tragedy for the U.S.”