PayPal co-founder and venture capitalist, Peter Thiel, has warned that the Chinese central government may be supporting Bitcoin as a means to undermine the foreign and monetary policy of the United States.
But, he added, it has tried to use the Euro the same way.
Speaking at a virtual event hosted by conservative non-profit, the Richard Nixon Foundation, Thiel was commenting on whether China’s central bank-issued digital currency, or CBDC, could threaten the U.S. dollar’s status as a global reserve currency.
While Thiel, who is known to be pro-Bitcoin, suggested an “internal stablecoin in China” will amount to little more than “some sort of totalitarian measuring device,” he added that China may view Bitcoin as a tool to erode the dollar’s hegemony:
“From China’s point of view, they don’t like the U.S. having this reserve currency, because it gives a lot of leverage over oil supply chains and all sorts of things like that,” he said, adding:
“Even though I’m a pro-crypto, pro-Bitcoin maximalist person, I do wonder whether if at this point, Bitcoin should also be thought of in part as a Chinese financial weapon against the U.S. where it threatens fiat money, but it especially threatens the U.S. dollar.”
Thiel alluded to Chinese efforts to denominate oil trades in Euros during recent years in a bid to undermine the global standing of the dollar, stating: “I think the Euro, you can think of as part of a Chinese weapon against the dollar — the last decade didn’t really work that way, but China would have liked to see two reserve currencies, like the Euro.”
The venture capitalist speculated China does not actually want its renminbi to become the global reserve currency, noting the government would have to “open their capital accounts” among other measures “they really don’t want to do.”
As such, Thiel concludes that supporting Bitcoin offers China an elegant means to weaken the dollar’s standing internationally:
“China wants to do things to weaken [the dollar] — China’s long Bitcoin, and perhaps, from a geopolitical perspective, the U.S. should be asking some tougher questions about exactly how that works.”