#FOMCWatch

The meeting point between crypto assets and central banks is shaping up around Central Bank Digital Currencies (CBDCs) and the regulated integration of crypto into the traditional financial system.

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🔗 Main Points of Convergence

1. Central Bank Digital Currencies (CBDCs)

These are state-backed digital currencies (e.g., Digital TL, Digital Euro, Digital Yuan).

They may use blockchain or Distributed Ledger Technology (DLT), but remain centrally controlled.

CBDCs adopt the speed, cross-border capability, and low transaction cost of crypto—while maintaining government oversight.

Convergence: Central banks are leveraging crypto infrastructure to build their own digital currencies.

2. Stablecoin Regulation

Stablecoins like USDT or USDC bridge the gap between crypto and fiat.

Central banks want to regulate them, ensuring they are backed by real reserves.

Convergence: Regulated stablecoins could be pegged directly to central bank reserves.

3. Integration into the Financial System

More crypto exchanges are connecting to traditional banks via APIs and regulatory frameworks.

There's ongoing testing for integrating crypto systems with global networks like SWIFT.

Convergence: Wallets and bank accounts may soon operate in sync.

4. Blockchain in Public Infrastructure

Central banks are exploring blockchain for cross-border payments, bond issuance, and identity verification.

Convergence: Public banking systems are being linked with private blockchain networks.

5. Legitimization Through Regulation

As crypto adoption grows, governments are drafting regulations to bring it into the legal framework.

This leads to more cooperation with central authorities.

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⚔️ Still Some Conflicts Exist

Centralization vs. Decentralization: Crypto's philosophy is rooted in decentralization, while central banks operate in a centralized model.

Privacy: Crypto users value privacy; CBDCs are built for traceability and oversight.