Is the Push for CBDCs a Threat to Crypto Freedom or a Step Toward Mass Adoption?

A new study by the Atlantic Council has revealed a dramatic rise in global interest in central bank digital currencies (CBDCs). According to the survey, a record 134 countries and currency unions, representing 98% of global GDP, are exploring CBDCs, marking a significant increase from just 35 countries in May 2020. Notably, all G20 nations are involved, with 19 in advanced stages and 13, including Brazil, Japan, India, Australia, Russia, and Turkey, already conducting pilot programs. The number of ongoing CBDC pilots globally has reached a new peak of 44.

While CBDCs are often positioned as modernizing forces in the financial landscape, their centralized nature contrasts sharply with the decentralized ethos of cryptocurrencies. This juxtaposition raises critical questions: Do CBDCs represent a threat to the foundational principles of crypto freedom, or could they serve as a bridge toward broader mass adoption of digital currencies?

CBDCs: Driving Financial Inclusion or State Control?

Proponents of Central Bank Digital Currencies (CBDCs) argue that these digital assets have the potential to transform the financial landscape by increasing accessibility and improving transaction efficiency. By leveraging digital infrastructure, CBDCs could address financial inclusion gaps, lower costs, and enhance the speed and security of payments.

One of the most significant advantages of CBDCs is the ability to expand financial inclusion through CBDCs, particularly in regions with high unbanked populations. According to the World Bank’s 2025 financial inclusion report, over 80% of the world’s 1.4 billion adults without financial accounts reside in places vulnerable to climate change, making them even more susceptible to economic and environmental shocks.

About 60% of emerging and low-income countries see financial inclusion as one of the top three motivations for issuing a CBDC. Countries such as The Bahamas and Nigeria have already launched CBDCs—the Sand Dollar and eNaira, respectively—to address financial exclusion. However, the effectiveness of these initiatives varies, with Nigeria facing low adoption rates despite efforts to promote eNaira usage.

Another critical advantage of CBDCs is their potential to reduce transaction costs by eliminating intermediaries. Traditional cross-border payments involve commercial banks, remittance providers, and payment processors, each adding fees and delays to transactions. The International Monetary Fund (IMF) suggests that CBDCs can enhance competition in the payments market, fostering more direct transaction settlements and reducing financial service costs.

Speed and security are also key benefits of CBDCs. Unlike conventional banking systems that require multiple days to clear transactions, CBDCs facilitate real-time payments, reducing processing delays and improving efficiency. However, settlement failures and delays remain a challenge. Data from the Swift network covering cross-border settlement and reconciliation flows show that about one out of every ten securities transactions requires correction or ends up failing.

CBDCs could also improve government efficiency in financial transactions. By enabling direct digital payments, governments can distribute social benefits, pensions, and stimulus packages instantly and transparently.

However, the very features that make CBDCs efficient also raise concerns about digital currency regulation and state control. Unlike cash, which allows for anonymous transactions, CBDCs are fully traceable, giving governments the ability to monitor financial activity in real time. This level of oversight could lead to restrictions on transactions, the freezing of assets, or even financial surveillance.

The debate over CBDCs is ultimately a balance between financial access and individual freedoms. While they hold promise for inclusion and efficiency, their implementation must be carefully designed to prevent excessive state oversight and protect financial privacy.

Threat to Crypto Freedom: Risks of CBDCs to Decentralization and Financial Sovereignty

Central Bank Digital Currencies (CBDCs) pose a significant threat to the fundamental principles of decentralization and financial sovereignty that cryptocurrencies were created to uphold. Unlike decentralized digital assets such as Bitcoin and Ethereum, which grant users financial independence, CBDCs are fully controlled by central banks. This reintroduces government oversight and raises concerns about financial censorship, as authorities could potentially monitor, restrict, or freeze transactions based on regulatory policies or political decisions.

One of the primary risks associated with CBDCs is their vulnerability to cybersecurity threats. In 2021, the World Economic Forum (WEF) highlighted that CBDCs could be targets for cyberattacks, data breaches, and financial theft. A centralized digital currency system requires a highly secure, government-controlled database to track all transactions, making it an attractive target for hackers. In a worst-case scenario, a successful attack on a CBDC network could disrupt national payment systems, destabilize financial markets, and even hinder emergency government disbursements.

Another major concern is the potential for financial exclusion through programmability features. Governments could implement mechanisms that dictate how and when people can use their money. For example, during trials of China’s digital yuan, authorities tested an expiration feature, requiring recipients to spend their funds within a set period or risk losing them. While such measures are intended to stimulate economic activity, they significantly limit personal financial autonomy by forcing individuals into government-imposed spending patterns.

Beyond these concerns, CBDC vs. cryptocurrency remains a fundamental debate. Bitcoin, Ethereum, and similar assets operate on blockchain networks that eliminate intermediaries and grant users direct control over their financial assets. In contrast, CBDCs are issued and managed by central banks, reintroducing centralized authority over digital transactions. This level of control increases the risk of financial censorship, where governments could restrict access to funds or impose conditions on how money can be used.

Moreover, the widespread adoption of CBDCs could reduce the appeal and utility of decentralized cryptocurrencies. Many governments might introduce regulations that restrict crypto transactions to encourage CBDC adoption, thereby limiting financial freedom for crypto users. Additionally, CBDCs could be leveraged to enforce stricter regulatory compliance, making it increasingly difficult for individuals to engage in peer-to-peer transactions without government oversight.

While CBDCs offer efficiency and regulatory control benefits, their implications for decentralization and financial sovereignty cannot be overlooked. If widely adopted, they could reshape the global financial system in a way that prioritizes state control over individual financial freedom, potentially undermining the very principles that cryptocurrencies were designed to protect.

Risks and Benefits of CBDCs

Global Case Studies: Reviewing Countries That Have Implemented or Piloted CBDCs and the Outcomes Observed

Countries around the world have taken varying approaches to Central Bank Digital Currencies (CBDCs), with mixed results. Examining real-world implementations provides insight into the challenges and impact of these digital currencies.

In China, the digital yuan (e-CNY) has made significant strides, with transaction volumes reaching CNY7 trillion ($986 billion) across 17 provinces as of June 2024. It has been integrated into sectors such as education, healthcare, and tourism.

🇨🇳China’s digital yuan (e-CNY) is still the largest CBDC pilot in the world.

In June 2024, e-CNY transactions reached 7 trillion yuan ($986 billion) in 17 provinces, and is being used across sectors such as education, healthcare, and tourism. pic.twitter.com/EKFty11ua2

— Atlantic Council GeoEconomics Center (@ACGeoEcon) September 17, 2024

However, despite government support, adoption remains slow, with many Chinese residents continuing to favour established digital payment systems like Alipay and WeChat Pay over the state-backed alternative.

Nigeria’s eNaira, launched in 2021, has faced similar struggles. By March 2024, it accounted for less than 1% of the total currency in circulation. In an effort to drive adoption, the government removed the requirement for bank accounts and introduced incentives like discounts for eNaira transactions. However, these measures have yet to translate into widespread use.

The Bahamas, one of the early adopters of CBDCs, introduced the Sand Dollar in 2020 to enhance financial inclusion. Yet, uptake has been slow, prompting the Central Bank to allocate $1 million in Sand Dollars to encourage adoption throughout 2024.

Jamaica’s Jam-Dex was introduced to facilitate digital transactions, with approximately 260,000 users opening accounts by early 2024. However, widespread adoption has been hampered by logistical issues. Many merchants prefer to use their existing point-of-sale (POS) systems that accept credit and debit cards rather than integrating an entirely new infrastructure for Jam-Dex payments. Bank of Jamaica Governor Richard Byles acknowledged this challenge, stating that while some users have adopted the digital currency, merchant onboarding has been slower than anticipated.

The European Union has taken a more cautious approach with its digital euro project. In November 2023, the European Central Bank (ECB) entered the preparation phase, focusing on finalizing the digital euro’s framework and selecting platform providers. Over 1,000 financial industry experts have been engaged to assess its potential implications for the financial sector.

Meanwhile, the United States remains in the pilot phase of its CBDC exploration. While the Federal Reserve has conducted various studies and experiments, the digital dollar faces strong opposition from lawmakers and financial institutions. The proposed Digital Dollar Pilot Prevention Act reflects concerns over privacy, financial control, and potential government overreach.

These global case studies highlight the complex landscape of CBDC implementation. While some nations push forward with adoption, challenges such as regulatory uncertainty, user reluctance, and infrastructure limitations continue to shape the trajectory of these digital currencies.

Conclusion: Coexistence or Conflict?

The debate over CBDCs and their impact on cryptocurrency adoption remains complex and multifaceted. While CBDCs offer undeniable benefits such as financial inclusion, reduced transaction costs, and government efficiency, their centralized nature raises concerns about privacy, surveillance, and potential financial control.

For crypto advocates, the key issue is whether CBDCs will be used to complement or suppress decentralized digital assets. If governments impose restrictions on cryptocurrencies in favour of CBDCs, the risk to financial sovereignty and decentralization is real. However, if CBDCs create a regulatory framework that fosters innovation while allowing decentralized cryptocurrencies to thrive, they could serve as a stepping stone to broader digital currency adoption.

Ultimately, the future of crypto freedom in a CBDC-driven world will depend on digital currency regulation, technological developments, and user adoption trends. The balance between innovation and control will determine whether CBDCs coexist with or pose a fundamental threat to the decentralized financial revolution.

Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence. 

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