Investing.com – Changpeng Zhao, CEO of cryptocurrency exchange Binance, believes that the contribution of central bank digital currencies (CBDCs) will be largely positive for the crypto world, but warns issuers against the fact to isolate them from the larger ecosystem.
CBDCs are an “extra option,” which is usually better than not having one, he said. “However, as governments and regulators seek to create their own CBDCs, I caution them against their very closed nature.”
Regulators around the world are currently focused on an effort to put in place rules of function for the crypto industry. However, the attitude of the authorities ranges from hostility, as is the case in China or Russia, to the warm welcome seen in the United Arab Emirates.
CBDCs in a Special Niche Amid Cryptos
Zhao expects CBDCs to force consumers to ask permission to use them for certain things, like investing in projects in different countries. A long approval process to get permission would mean that it takes longer for CBDCs to be integrated into exchanges, hampering their interoperability with other crypto.
He highlighted the possible role of CBDCs in increasing the adoption of digital currency by traders and the potential educational tool they could prove to the masses: “You cannot learn blockchain without learning it. And when you get to know bitcoin, you get to know the valuable fundamental properties of money – scarcity, freedom of transaction, and low fees. “
Although central banks around the world are exploring the development of CBDCs, the cryptocurrency industry has not fully embraced CBDCs. This is in part due to the fact that CBDCs contradict the ethics of other digital currencies, which fall outside the purview of traditional finance.
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