Changpeng Zhao, the CEO of cryptocurrency exchange Binance, believes the contribution of central banks digital currencies (CBDC) will be broadly positive to the crypto world, but warns issuers against isolating them from the broader ecosystem.
- CBDCs are an additional option, which is usually better than not having one, Zhao said in a blog post on Tuesday.
- However, as governments and regulators look to create their own CBDCs, I caution them against their very walled-garden nature, he wrote.
- The CEO expects CBDCs to require consumers to ask for permission to use them for certain things, such as investing in projects in different countries. A lengthy approval process to obtain permission would mean it takes longer for CBDCs to be integrated into exchanges, hindering their interoperability with other crypto.
- He pointed to the possible role of CBDCs in increasing digital currency adoption by merchants and the potential educational tool they could prove for the masses: You can’t learn about blockchain without learning about bitcoin. And when you learn about bitcoin, you learn about the valuable fundamental properties of money – scarcity, freedom to transact and low fees, Zhao wrote
- Although central banks across the world are exploring the development of CBDCs, the crypto industry has not completely gotten on board with CBDCs. This is in part due to CBDCs being at odds with the ethos of other digital currencies, which are outside the purview of mainstream finance.