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Binance CEO warns of CBDC drawbacks as digital dollar pilots proceed in US

CBDCs would never offer the same freedom to use as cryptocurrencies like Bitcoin, according to Binance CEO Changpeng Zhao.

Cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) will co-exist “for a while” with more conservative digital currencies such as China’s digital yuan, according to Binance CEO Changpeng Zhao in a Bloomberg interview on Monday.

According to Zhao, central bank digital currencies will lack some of the core characteristics of cryptocurrencies such as Bitcoin (BTC), such as freedom of use and limited supply. “At the end of the day,” he said, “those are core properties that users care about.”

The variations between the two types of digital assets, according to Zhao, can make central bank-issued currencies unappealing to crypto industry participants. He pointed out that “Most central bank digital currencies are going to have a lot of control attached to them,” he noted.

According to Cointelegraph.com, unlike fiat currency such as the US dollar, the world’s most common cryptocurrency, Bitcoin, has a limited supply, which means that there will never be more than 21 million Bitcoins in existence. Many proponents of cryptocurrency have pointed to money printing-fueled inflation, implying that Bitcoin could emerge as a possible hedge against fiat catastrophe.

Zhao’s comments on CBDCs come as the United States moves closer to implementing its CBDC proposals, with the nonprofit Digital Dollar Project launching five pilot digital dollar projects on Monday. To carry out the tests over the next 12 months, the organization partnered with accounting giant Accenture, which has been working with Sweden’s central bank on the development of a CBDC since 2019.

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