The Central Bank of Brazil announced the postponement of the completion of the drex pilot, the Brazilian CBDC, due to the inefficiency of the privacy solutions presented for the project so far. The pilot will have a new phase, finalized in 2025, and will also feature the implementation of smart contracts to nurture use cases proposed by private parties.
Brazilian CBDC Pilot Delayed to 2025; Privacy Implementations Insufficient for Tests Involving General Population
The central bank recently reported about the postponement of the pilot of drex, the Brazilian central bank digital currency (CBDC), to 2025 due to the inefficiency of the privacy solutions presented for this project. A new pilot phase, which will start in July and end in 2025, will allow for new functionality, including smart contracts, to be implemented by third parties.
This would extend the current scope of the pilot, pushing for private entities to propose new CBDC projects that are outside the scope of what the central bank designed for drex originally.
According to local reports, the primary motive behind this measure would be that the privacy solutions trialed did not present the “necessary maturity to guarantee compliance with all requirements and legal issues related to the preservation of citizens’ privacy.”
Furthermore, the bank reiterated that tests involving the general population “will only be carried out when there is certainty about the ability to meet privacy requirements.” Drex is being designed to be part of a blockchain system supported by Hyperledger Besu, which complicates the compliance of standard transactions with the country’s banking and tax secrecy regulations.
This would make it impossible for drex to be issued and tested this year, as Central Bank of Brazil’s digital real project coordinator Fabio Araujo noted in June. At that time, he also reinforced the relevance of the privacy issue, stating that they had to find a “balance between privacy and use, to create products with which we will give good usability to digital assets.”
