Changpeng Zhao, the enigmatic chief executive of Binance, believes a central bank digital currency that’s designed well enough could become a threat to Bitcoin.
In a video interview with Fortune senior writer Jeff Roberts, he was asked how the People’s Bank of China’s digital yuan initiative would affect the crypto industry.
Zhao responded that any blockchain or digital currency would be good for the industry overall as it legitimizes digital assets and broadens awareness. He added that while there is currently a race between major countries to launch one, most CBDCs are likely to be more restrictive initially but will evolve over time.
When asked directly about the threat to Bitcoin, CZ responded that very few CBDCs would have the same freedom as Bitcoin and they would be highly centralized and controlled. However, over a longer term he cautioned:
“If there is a government pushing another cryptocurrency that’s even more open, more free, has less restrictions than Bitcoin, and is faster and cheaper to use, then that would threaten Bitcoin. But that is good for the industry, it’s just something better than Bitcoin, and would replace it.”
He added that it wouldn’t be a bad thing as it would be similar to web language HTML5 replacing HTML4.
When asked whether Binance had any intentions of launching a yuan-based stablecoin to complement the existing stablecoins on the exchange, CZ stated that it would not be coming anytime soon. He added that there were too many restrictions regarding capital flight from China.
Interest in CBDCs has grown in 2020, with mixed views. German politician and executive board member of the country’s central bank, Burkhard Balz, stated recently that a digital Euro would be a threat to the financial system if used as a store of value.
The U.S. does not seem in a hurry to launch a digital dollar but Morgan Creek Digital co-founder Anthony Pompliano argues that the U.S. will fall behind China if it doesn’t act soon.