Paolo Ardoino, the chief technology officer at Tether, believes that the growing developments around central bank digital currencies (CBDCs) globally wouldn’t really impact the role of private stablecoins.
Ardoino shared his two cents in a Twitter thread on the growing discussion around CBDCs and what their role could be in the current payment system. He said CBDCs would only replace the age-old centralized payment networks as SWIFT and use private blockchains to fulfill most transactions.
He went on to explain that CBDCs are not about digitizing the fiat currency as it has already been done, given most modern-day transactions are digital. The main goal of CBDCs is to use private blockchains as a modern and cost-controlled tech infrastructure, where most of the bank transfers and credit/debit card transactions will be settled via CBDCs.
Tether CTO claimed that private stablecoins such as USDT will remain relevant even in the age of government-issued digital currencies given, private stablecoins would give users the option to transfer across chains and would be available across multiple blockchains of their choice, something CBDCs won’t do.
Ardoino’s response comes in the wake of growing debate around whether CBDCs would cut the role of the private stablecoin sector. A discussion gained momentum in the United States after calls from several lawmakers to regulate the stablecoin market.
According to the Atlantic CBDC tracker, 86 countries are currently in the process of developing their sovereign digital currency, with an increase of over 100% since May 2020. Out of these 86 nations, nine countries have launched their CBDC while fifteen countries are in the pilot phase.
Among the world's, China is leading the CBDC race with a fully functional digital yuan currently being tested out across the country. Several European nations such as France and Switzerland have started cross-border trials, while the U.S. has yet to finalize any plans for a digital dollar.