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11 potential impacts on crypto and the market from the rise of CBDCs

Press Releases Crypto News Cointelegraph 11 potential impacts on crypto and the market from the rise of CBDCs

In June 2023, the Atlantic Council, based in the United States, announced the results of a study on global nations’ interest in and progress toward creating their own central bank digital currencies. Eleven countries have already launched CBDCs; 130 others are in the exploratory phase, and about half of those have begun the development process.

Market watchers cite multiple factors behind governments’ push toward CBDCs, from the decreasing use of cash by the general population to geopolitical tensions and events. Whatever the underlying reasons, though, crypto industry players need to keep an eye on developments and consider how the rise of CBDCs could impact the industry and global marketplace. Here, 11 members of Cointelegraph Innovation Circle share their predictions for possible outcomes from the ever-expanding development and introduction of CBDCs.

A boost in the uptake of cryptocurrencies

CBDCs manifest the “if we can’t beat them, join them” attitude of governments in response to blockchain technology. In the short to medium term, CBDCs could help legitimize crypto but struggle to compete in utility and benefits, likely leading to a boost in the uptake of cryptocurrencies. In the long term, governments may attempt to stealthily “phase out” crypto as CBDCs mature and gain relevancy. – Sheraz Ahmed, STORM Partners

Deepened importance of decentralization

CBDCs are still largely unknown territory. The risks to personal freedoms are real. A potential crypto industry impact is the deepened importance of decentralization, privacy and other forms of the human rights of freedom and self-determination. – Tiago Serôdio, Partisia Blockchain

Tighter regulations

The rise of CBDCs may validate blockchain technology and cryptocurrencies, boosting public familiarity with and acceptance of digital assets. However, this could also bring tighter regulations, impacting existing crypto market dynamics

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Author: Cointelegraph Innovation Circle

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