Cryptocurrencies like Bitcoin

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could potentially find mutually beneficial interactions with central bank digital currencies (CBDCs), according to an industry leader.

While crypto is often associated with financial freedom, the concept of CBDC is often seen as the polar opposite. However, that doesn’t mean there can’t be a balance between the two, according to Itai Avneri, chief operating officer and deputy general manager of crypto trading platform INX.

CBDCs and regulated cryptocurrencies could potentially complement each other in the future, as both types of digital currencies have their own advantages, Avneri said in an interview with Cointelegraph on Dec. 22.

Avneri compared CBDCs to regulated primary offerings and suggested that allowing or allowing crypto funds to participate in such offerings would be mutually beneficial. This would specifically make these financial instruments more accessible to a wider audience while giving crypto investors “the convenience and confidence of trading in a regulated environment.”

“In my vision, the CBDC ecosystem will be no different, but we still have a long way to go before we get there,” said INX Deputy CEO, adding that the balance between CBDCs and cryptography would be a “master art”. .

The official noted that he is not aware of any current initiatives that would allow buying a cryptocurrency like Bitcoin with a CBDC or other potential interactions between CBDCs and crypto.

Avneri also stressed the importance of combining regulation and decentralization, as full decentralization overlooks regulations such as Know Your Customer (KYC) checks, which “come at a price that sometimes isn’t good for investors.” He stated:

“When I think about working with governments and central banks, I think it is necessary to identify customers because it serves their interests and builds the necessary trust in the ecosystem.”
Avneri emphasized that CBDC users should still be able to interact privately, “similar to how they use physical cash today.”

The news comes as INX partners with authentication firm SICPA to help governments develop CBDC ecosystems. As previously reported, INX was the first company to conduct a token IPO approved by the United States Securities and Exchange Commission in 2021.

Related: Crypto Could Trigger Next Financial Crisis, Says India’s RBI Chief

INX’s deputy CEO isn’t the only one who thinks CBDCs and cryptocurrency technology could benefit from each other in the future. Thomas Moser, board member of the Swiss National Bank, believes that centralized finance projects like CBDCs could provide more stability in the development of decentralized finance.

Mikkel Morch, executive director of digital asset hedge fund ARK36, also believes that CBDCs do not pose a direct threat to cryptocurrencies like Bitcoin. Still, according to Morch, CBDC may come with some risks associated with stablecoins like Tether (USDT).

Source: CoinTelegraph