While some governments continue to condemn cryptocurrency, some industry executives argue that it may be beneficial to CBDCs.
According to one industry executive, cryptocurrencies such as Bitcoin could have mutually beneficial interactions with central bank digital currencies (CBDCs).
While cryptocurrency is frequently associated with financial freedom, the concept of CBDC is frequently perceived as the polar opposite. However, Itai Avneri, chief operating officer and deputy CEO of the crypto trading platform INX, believes that a balance between the two is possible.
CBDCs and regulated cryptocurrencies may complement each other in the future because the two types of digital currencies have distinct advantages, according to Avneri in an interview with Cointelegraph on December 22.
Avneri compared CBDCs to regulated primary offerings, arguing that allowing or enabling crypto funds to participate in such offerings would benefit both parties. This would specifically expose such financial instruments to a larger audience while also providing cryptocurrency investors with “comfort and confidence to trade in a regulated environment.”
“In my vision, the CBDC ecosystem will be similar, but we have a long journey ahead of us,” INX deputy CEO said, adding that balancing CBDCs and crypto would be a “master art.”
The executive stated that he is not aware of any current initiative that would allow one to purchase a cryptocurrency such as Bitcoin using a CBDC or other potential interactions between CBDCs and cryptocurrency.
Avneri also emphasized the significance of combining regulation and decentralization because full decentralization excludes regulations such as Know Your Customer (KYC) controls, which “comes at a price that sometimes is not good for investors.” “When considering working with governments and central banks, I believe customers must be identified as it will serve their interests and build the necessary trust in the ecosystem,” he said “
Avneri emphasized that CBDC users must still be able to interact privately “similar to how they might use cash today.”
The announcement comes as INX enters into a partnership with authentication firm SICPA to assist governments in developing CBDC ecosystems. As previously reported, INX was the first company in 2021 to conduct a tokenized initial public offering that was approved by the US Securities and Exchange Commission.
CBDCs and cryptocurrency technology may be mutually beneficial in the future, according to INX’s deputy CEO. According to Thomas Moser, a member of the Swiss National Bank’s governing board, centralized financial projects such as CBDCs could enable more stability in the development of decentralized finance.
CBDCs, according to Mikkel Morch, executive director of the digital asset hedge fund ARK36, do not pose a direct threat to cryptocurrencies such as Bitcoin. According to Morch, CBDC may pose some risks when compared to stablecoins such as Tether (USDT).
