Cryptocurrencies like Bitcoin (BTC) could potentially find some mutually beneficial interactions with central bank digital currencies (CBDCs), according to one industry executive.
While crypto is often associated with financial freedom, the concept of CBDC is frequently seen as the exact opposite. But this doesn’t mean that there cannot be a balance between the two, according to Itai Avneri, chief operating officer and deputy CEO at the crypto trading platform INX.
CBDCs and regulated cryptocurrencies could potentially complement each other in the future as the two types of digital currencies have their own benefits, Avneri said in an interview with Cointelegraph on Dec. 22.
Comparing CBDCs to regulated primary offerings, Avneri suggested that allowing or enabling crypto funds to participate in such offerings would be beneficial for both sides. That would specifically expose such financial instruments to a wider audience, while also giving crypto investors “comfort and confidence to trade in a regulated environment.”
“In my vision, the CBDC ecosystem will not be different, but we have a long journey ahead of us till we get there,” INX deputy CEO said, adding that balance between CBDCs and crypto would be a “master art.”
The exec noted that he is not familiar with any current initiative that would allow one to buy a cryptocurrency like Bitcoin with a CBDC or other potential interactions between CBDCs and crypto.
Avneri also pointed out the importance of combining regulation and decentralization because full decentralization misses out on regulations like Know Your Customer (KYC) controls, which “comes with a price that sometimes is not good for investors.” He stated:
“When thinking about working with governments and central banks, I believe customers must be identified as it will serve their interest and will build the needed trust in the ecosystem.”
Avneri emphasized that CBDC users still need to be able to interact in a private manner “similar to how they may use physical cash today.”
The news comes amid INX entering a partnership with authentication firm SICPA to help governments develop CBDC…