Opinion The USA is Drastically Falling Behind in Blockchain Development

The USA is Drastically Falling Behind in Blockchain Development

February 8, 2020

The United States is falling behind when it comes to blockchain development and blockchain technology inclusion. The biggest economy in the world seems to be playing a wait and see game as many of the important advances in this domain simply pass it by. This approach has been enforced through several different presidential administrations. The current government of Donald Trump is not doing anything different, in spite of the fact that some of its associates are big crypto fans, at least in theory. In the previous years, this way of looking at blockchain did not seem overly problematic, being that most other countries, small and big, thought of crypto and blockchain in a similar manner.

Today however, this is no longer the Modus operandi for everyone, including the biggest competitors for the US, mainly China and Russia. As these nations and many other countries continue to explore and even introduce blockchain technologies the question becomes whether the US can allow itself to simply ignore everything that is happening in this essential domain of informational tech.

US Crypto Landscape

On one hand, it might seem that the US has a really vibrant and diverse blockchain development community. After all, the country has a range of companies and startups that all deal with either blockchain as a management technology or they deal directly with cryptocurrency applications. Coinbase is just one of those and it is arguably the biggest cryptocurrency company in the world. There are others like it and seemingly every day new businesses are cropping up. However, none of these had or will have in the near future an easy time with the regulatory agencies. Previously, many companies have been fined millions all thanks to the Securities and Exchange Commission (SEC) penalties.

These regulatory chokepoints are just one of the problems private sector crypto companies face in the US on a daily basis. In most of these cases, the potential for money laundering and other illicit acts is what drives the US regulators to stop any further advancement of these companies. Arguably, the banking and financial companies that deal in the traditional sector of the same industry do not have experience with SEC that are anything near the problems cryptocurrency organization face on a daily basis. This is the reason by many crypto companies choose to either split their operations with some offshore branch old do completely relocate to some more hospitable territory.

Greener Pastures

As this process of relocation and operations splitting continuous, it is the US economy and its potential to improve governance through blockchain that actually gets hurt in the end. Basically, the process is pulling away from the talent pool that could be used in the US properly not just by private companies and startups but also by the government and its agencies. This process is not a huge exodus and it is not something very visible at any moment, but it is constant. Also, it could be argued that more people are exiting the US crypto ecosystem than there are those entering it from other countries.

Unlike in domains like esports or social media, the US is not exactly the place to be when it comes to blockchain development. The toll of this fact is something that already came back to bite the country which decided to give precedence to regulatory oversight and even a regulatory squeeze. This squeeze did not allow a new field of IT technology and business to flourish and develop naturally. This is not just very unlike the general American entrepreneurial spirit, but it is also putting the same country closer to the back seat in terms of big and global blockchain developments.

Lifting the Anchor

There are voices in the US that are presenting a different narrative than the one currently in place. One of them is Warren Davison, a US Congressman who is also a big supporter of the crypto and blockchain domain, even more so when talking about the development space and what it looks like in the US. He believes that the legislature around cryptocurrency should change to accommodate a space that would usher in a new chapter in the development of these technologies on US soil and by US companies, as well as governmental agencies.

Right now, instead of helping the developers and consumers, it is basically putting an anchor around their feet. Davison believes that like with any other technology, the innovators of America and their associates should try and bring the best possible product on the market and not worry whether or not they will get entangled in the endless regulatory red tape. This Congressman is not the only one who thinks this way, but their influence is slowly growing as a unified force asking for a sensible change in the regulatory mechanisms. The same is even more pronounced now, as bitcoin is climbing back to the 10,000 USD mark that many of the nay-sayers believed will never be revisited again.

China and Russia

The underlying message Davidson is presenting is the idea that the US is slowly losing the spot of the most advanced blockchain nation to Russia and China. However, the truth is that the same spot is already in Chinese possession. While it is hard to understand what is going on in either country thanks to the approach to transparency they take, certainly, the Chinese Central Bank is already developing its digital currency. At the same time, the local population, thanks to apps like WeChat Pay, is completely used to the use of electronic payments, often right in the spots of purchase and using mobile devices.

No matter how advanced the US might seem, this is nothing close to reality in its states on average and in particular away from big population centers. Yes, the US policy makers might have issues with how regulatory bodies deal with private companies, like for example the backlash that Facebook experienced with Libra, but the truth remains that governmental agencies are likely doing very little on blockchain themselves. So, if the US Federal Reserve decided they need a digital US dollar and immediately threw everything they had at making it, they still would not get to beat China in all likelihood.