Brazil's Drex CBDC is designed to be part of a blockchain system supported by the Ethereum-based Hyperledger Besu.
Photo Credit: Unsplash/ Ramon Buçard
Brazil is currently serving as the president of G20 and will continue work on Web3 laws
Brazil has reportedly halted the pilot testing of Drex, its central bank digital currency (CBDC), The pilot of the country's first CBDC will take place by 2025, as the Central Bank of Brazil has found blockchain privacy solutions to be insufficient, which could cause financial inconvenience to Brazilian nationals, according to a report that states the South American nation has decided to conduct privacy trials on its CBDC with the help of third-party institutions. This will be phase two of Drex’s trials, with a major focus on privacy.
Brazil's CBDC Project Reportedly Delayed to 2025
The Banco Central do Brasil (BCB) will launch Drax into the second phase of trials in July this year. It has been designed to be part of a blockchain system supported by the Ethereum-based Hyperledger Besu. According to a Valor Econômico report (in Portuguese), the launch of the CBDC has been delayed to 2025. The central bank is looking to finetune the country’s financial compliance, banking, and tax secrecy regulations.
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Cybersecurity firms like Zether and Parfin are working with Brazilian authorities on security provisions for finance-related blockchain protocols such as the one used to develop the CBDC. In the coming months, the functionality of smart contracts and wholesale use on Drex will alos be tested.
“It has already been reported that what Drex got stuck on the issue of secrecy. Does that mean it's unfeasible? No, it is possible to think of solutions that guarantee banking secrecy, the issue is that they take away scale, speed, increase the cost or are private solutions, which can create problems down the road,” the publication quoted Rafael Bianchini Abreu, coordinator of financial risk at the Central Bank as saying (translated from Portuguese).
India, China Ahead of Brazil in CBDC Tests
Brazil is currently presiding over the G20 group of nations for the next year. Under its leadership, Brazil will continue the work on formulating regulations to govern the blockchain sector. It currently lags behind many other nations that are exploring the arena of CBDC.
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India and China, and Japan are already conducting public trials for CBDCs. The UK is also in the advanced assessment stage of the Digital Pound CBDC.
CBDCs are designed to create blockchain representations of fiat currencies that are issued and monitored by central banks. With CBDC transactions, transactional histories are recorded on blockchain networks in an unchangeable format. They are expected to function as an instrument of online payments offering faster transaction speed, concrete history, and quicker transfer of funds internationally.
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