Cryptocurrency, such as Bitcoin (BTC), may have the opportunity for positive interactions with central bank digital currencies (CBDCs), as suggested by an industry expert.
Though cryptocurrency is commonly linked with financial independence, CBDC is often viewed as its antithesis. Despite this apparent contrast, Itai Avneri, the chief operating officer and deputy CEO of the cryptocurrency trading platform INX, believes that a harmonious coexistence between the two is achievable.
Avneri mentioned in an interview with Cointelegraph on Dec. 22 that CBDCs and regulated cryptocurrencies could complement each other in the future, each offering distinct advantages. Drawing a parallel between CBDCs and regulated initial offerings, Avneri proposed that allowing crypto funds to engage in such offerings would be advantageous for both parties. This approach could broaden the exposure of these financial instruments to a larger audience while instilling confidence in crypto investors to operate within a regulated environment.
He continued by highlighting the necessity of finding a balance between CBDCs and cryptocurrencies, characterizing it as an intricate art form that requires meticulous attention.
Avneri acknowledged a lack of current initiatives facilitating the purchase of cryptocurrencies like Bitcoin with CBDCs or fostering other potential interactions between CBDCs and the crypto sphere.
Moreover, Avneri stressed the significance of integrating regulation and decentralization. He argued that complete decentralization, although appealing, disregards essential regulatory measures like Know Your Customer (KYC) controls, which are critical for safeguarding investor interests. Avneri endorsed the idea of identifying customers when collaborating with governments and central banks to enhance trust within the ecosystem.
The INX deputy CEO underlined the importance of CBDC users being able to transact privately, akin to their use of physical cash today.
In a recent development, INX has partnered with the authentication firm SICPA to aid governments in building CBDC ecosystems. INX made headlines when it became the first company to conduct a tokenized initial public offering sanctioned by the United States Securities and Exchange Commission in 2021.
Avneri’s perspective aligns with others in the industry, such as Thomas Moser, a governing board member at the Swiss National Bank, who believes that CBDCs could provide stability to decentralized finance development.
Mikkel Morch, the executive director at the digital asset hedge fund ARK36, perceives CBDCs as not directly threatening cryptocurrencies like Bitcoin. However, Morch highlighted potential risks for CBDCs concerning stablecoins like Tether (USDT).
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