EXCLUSIVE: CBDCs Epitomize Anti-Crypto Movement But There's A Catch, Elusiv Founder Says

Zinger Key Points
  • Centralized CBDC data poses risks, making it vulnerable to potential cyberattacks.
  • Governments could gain real-time access to CBDC transactions, eroding individual privacy.

Central Bank Digital Currencies (CBDCs) will epitomize the anti-crypto movement unless they are designed with ingrained security measures protecting users' privacy, Elusiv co-founder Julian Deschler said on Monday, amid sparked fervent discussions about their potential ramifications.

Ahead of Benzinga's Future of Digital Assets conference on Nov. 14, Deschler noted that Europe was several steps further on concrete legislation regulating digital assets and that the industry was "still at the stage where legislation should be developed more generally for digital assets, stablecoins, and cryptocurrencies."

He pointed out the merits, stating, "CBDCs can increase financial inclusion and access for the unbanked or underbanked."

He further elaborated on the dual-edged nature of CBDCs, emphasizing that while they "can reduce the need for cash handling and transportation," there's a catch. "All that data will be centralized, leaving it open to cyberattacks," Deschler warned.

"It is hard to say if CBDCs will become mandatory, but if we look at the trajectory of debit cards, it isn't impossible to see them gaining traction very quickly. Unless CBDCS are designed with ingrained security measures protecting users' privacy, they will epitomize the opposite of the crypto movement," he added.

Dwelling on the privacy implications, Deschler was candid in his concerns: "CBDC design warrants careful consideration of possible surveillance mechanisms."

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He further painted a grim picture where "governments and other third parties could have real-time access to every transfer made with a CBDC, eroding economic freedom and individual privacy."

Reflecting on the broader shift away from physical cash, Deschler observed the decline in cash usage, stating, "Cash has declined by nearly four percentage points in 2022."

He cautioned about the implications, underscoring the essential backup role cash plays, especially during financial crises, like the one witnessed in Greece in 2015.

Regarding CBDC designs, Deschler highlighted the need for a balanced approach. "Central banks exploring CBDCs will have many design choices," he remarked, hinting at the delicate balance between privacy protection and transparency.

He also pointed out the ongoing CBDC pilot in China, stating that "the digital yuan hit nearly $250 billion," but its significance in China's total money supply remains minimal.

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Posted In: CryptocurrencyNewsTop StoriesMarketsCBDCsCentral bank digital currenciesDigital AssetsDigital yuanElusivGreeceJulian DeschlerMiCA
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