U.S., China Jockeying for Techfin Leadership
The year of 2020 will be the first year of a U.S.-China digital finance war based on blockchain and cryptocurrency technology, SK Securities said in a recent report. The brokerage says that the two countries are stepping up efforts to preoccupy techfin using blockchain technology.
“The United States and China are engaged in a digital financial war, with the former using private companies and the latter through the central government," SK Securities said in the report, which is entitled “GAFA (Google, Apple, Facebook and Amazon) vs. People's Bank of China.”
"It's time to pay attention to the competition between financial businesses launched by big U.S. tech companies such as Facebook which have billions of users around the world, and digital currency electric payments (DCEPs), which the People’s Bank of China will issue this year," the report said.
“China is challenging the existing dollar-centered system through the globalization of the yuan with DCEPs,” saud Han Dae-hoon, the author of the report. “Platform companies of the United States, which is in a hegemony war with China, is entering the financial industry in earnest this year.”
"Amid a fierce digital financial war between the two countries, the Bank of Korea's attitude toward central bank digital currencies (CBDCs) entirely changed in just one year," Han noted. “The governor of the Bank of Korea said in his New Year message that the bank would strengthen research on CBDCs and respond flexibly to the rapidly changing policy environment. This position can be seen as an effort to keep pace with research on CBDCs by the Bank for International Settlements (BIS) and major countries."
In Korea, Naver and Kakao are focusing on the digital financial industry through such affiliates as Naver Pay, Naver Financial, Kakao Pay, Kakao Bank and Kakao Pay Securities. However, experts say that they still have a long way to go on the global stage.
"Naver and Kakao are planning to issue their own digital currency like Facebook, but they do not have enough users," the report said. "One way for them to follow is to benchmark overseas cases, including the use of Bitcoin by Microsoft (MS), Twitter and Square to develop their digital finance business." For example, Microsoft built a Bitcoin-based decentralized identification (DID) system and invested in institutional Bitcoin financial platform “Bakkt.” Twitter also defined Bitcoin as a key internet currency, and supports Bitcoin payment as an application of the global payment platform “Square.”