Brazil has reportedly halted pilot testing of Drex, its central bank digital currency (CBDC). financial inconvenience for Brazilian nationals, according to a report that claims the South American nation has decided to conduct privacy tests on its CBDC with the help of third-party institutions. This will be the second phase of Drex's trials, with a major focus on privacy.
Brazil's CBDC project has reportedly been delayed until 2025
Banco Central do Brasil (BCB) will launch Drax in the second phase of testing in July this year. It has been designed to be part of a Hyperledger Besu compatible blockchain system based on Ethereum. According to a report by Valor Econômico (in Portuguese), the launch of the CBDC has been delayed until 2025. The central bank is looking to fine-tune the country's financial compliance, banking and tax secrecy regulations.
Cybersecurity companies such as 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. Smart contract functionality and wholesale usage on Drex will also be tested in the coming months.
“It has already been reported that what Drex got stuck on the issue of secrecy. Does that mean it is unfeasible? No, you can think of solutions that guarantee banking secrecy, the issue is that they remove scale, agility, increase the cost or are private solutions, which can generate problems in the future”, the publication quotes Rafael Bianchini Abreu, financial risk coordinator at the Central Bank as saying (translated from Portuguese).
India, China ahead of Brazil in CBDC trials
Brazil currently chairs the G20 group of nations for the next year. Under his leadership, Brazil will continue to work on formulating regulations to govern the blockchain sector. It currently lags behind many other nations that are exploring the CBDC arena.
India and China, and Japan are already conducting public trials for CBDC. The UK is also in the advanced evaluation 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, transaction histories are recorded on blockchain networks in an immutable format. They are expected to function as an online payment instrument that offers faster transaction speed, concrete history and faster transfer of funds internationally.
