Senator Cynthia Lummis (R-Wyo.) wasted no time Thursday asking Treasury Secretary Scott Bessent the big question: Is China using blockchain to create a rival to American financial dominance?
Bessent told the Senate Banking Committee he “would not be surprised.”
Summary
- Bessent hints at gold-backed digital assets from China, but it’s unconfirmed.
- Hong Kong’s sandbox role allows China to explore new financial technologies, like a gold-backed digital asset, without directly involving mainland authorities.
- Why does it matter? It could potentially be a stable alternative to the dollar.
“We don’t know that for sure,” he added. “There are lots of rumors that China may be developing digital assets backed by something other than the RMB, perhaps gold-based. We haven’t seen that.”
So, what’s China’s game plan?
Apparently, Hong Kong is their “sandbox” — a financial testing ground where they can play with new ideas without getting mainland China too involved.
That means they can cook up gold-backed digital assets while keeping it on the down-low. A gold-backed asset could provide a stable store of value, which would directly challenge the dollar’s reserve currency status — especially since it wouldn’t be subject to U.S. monetary policy or sanctions.
Meanwhile, China’s digital yuan is still all about the RMB, so it’s not quite as rebellious.
Bessent didn’t stop there
When it came to Iran, he dropped this gem: Iranian leaders are moving money out “like crazy,” signaling “the end may be near” for the current regime. In a moment of unexpected drama, he likened it to “the rats leaving the ship.” If that’s not a metaphor for the ages, I don’t know what is.
And in a final mic-drop moment, Bessent stressed the importance of passing the Clarity Act, acknowledging that applying capital gains tax on cryptocurrency is a complex mess. The complexity of crypto taxes? It’s no surprise there.
In conclusion, the world of digital assets, gold-backed currencies, and escaping rats has never been more thrilling. Stay tuned for the next episode of “China’s Sandbox Adventures.”
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