Cryptoasset Anti-Financial Crime Specialist (CCAS) Certification Practice Test

How are central bank digital currencies (CBDCs) different from stablecoins?

1. CBDCs use blockchain technology.

2. CBDCs hold legal tender status.

3. Stablecoins use more modern technology.

4. Stablecoins are issued by the central monetary authority.

The correct answer is: CBDCs hold legal tender status.

Central Bank Digital Currencies (CBDCs) differ from stablecoins primarily in that CBDCs hold legal tender status. This means that CBDCs are issued and regulated by a country's central bank and are recognized by laws as an official form of currency that can be used for transactions, like physical cash. The government backs them, making them a state-sanctioned medium of exchange. On the other hand, stablecoins, while they aim to maintain a stable value typically pegged to a fiat currency, do not have legal tender status. They are generally issued by private entities and may not carry the same regulatory and legal assurances as CBDCs. This distinction is key in understanding the different roles these forms of digital currency play in the economy and the level of consumer protection and trust associated with them. While CBDCs may utilize blockchain technology, this characteristic is not exclusive to them, as stablecoins can also leverage blockchain. Similarly, stablecoins are not necessarily newer or more modern in their underlying technology compared to CBDCs, and stablecoins are not issued by a central monetary authority, which further highlights their separation from CBDCs.