Central bank digital currencies (CBDCs) will complement cryptocurrencies rather than compete with them, according to strategists and fund managers. Most probably, nations would promote their own CBDCs and sideline cryptocurrencies.
CBDCS Will Complement Cryptocurrencies Not Compete
In an interview series on digital currencies on the Reuters Global Markets Forum over the past week, strategists and fund managers are of the view that central bank digital currencies will complement cryptocurrencies rather than compete with them.
For instance, Meltem Demirors, chief strategy officer at CoinShares, said:
“Central bank digital currencies (CBDCs) are structurally no different than fiat, and they are very much complementary to crypto, not competitive.”
Similarly, Kevin Kelly, head of global macro strategy at digital asset research firm Delphi Digital, said CBDCs can aid crypto markets by bridging the gap between fiat and DeFi.
On the other hand, Vytautas Zabulis, managing director at digital asset trading solutions company H-Finance, is of the view that CBDCs will likely provide the preferred means for making digital payments without killing cryptocurrencies.
However, Todd Cipperman, managing principal at Cipperman Compliance Services, said it was still possible that nations would promote their own CBDCs and sideline cryptocurrencies:
“Could the United States government create its own U.S. digital currency and say we believe in crypto, but only this crypto? Sure, I think that could absolutely happen.”
While Everett Millman, a crypto analyst at Gainesville Coins Inc., said as long as there is interoperability between CBDCs and the existing infrastructure of crypto there will be a middle ground where both can coexist.
U.S. Congress Discussion on CBDCs
On 15th June, The House Fintech Task Force held an interview series about the future of central bank digital currencies, appearing more receptive to crypto in general.
Focusing on the particular challenges of a CBDC, Chair Maxine Waters (D-CA) spoke on more ambitious plans on crypto regulation.
At the same time, the discussion before the House highlighted many more details of a potential CBDC that would actually hold up progress. Privacy and financial inclusion were at the forefront of the discussion with Task force chairman Stephen Lynch (D-MA) phrasing it as a recurring objective.