The Central Bank of Brazil has announced a delay in the completion of the drex pilot, Brazil's CBDC, citing the inadequacy of the privacy solutions proposed for the project thus far. The pilot will undergo a new phase, concluding in 2025, and will incorporate the implementation of smart contracts to support use cases suggested by private entities.

Brazilian CBDC Pilot Postponed to 2025; Privacy Solutions Deemed Insufficient for Trials Involving the General Population

The central bank recently disclosed a postponement of the drex pilot, Brazil's central bank digital currency (CBDC), until 2025 due to the shortcomings of the privacy solutions presented for the project. A new pilot phase, set to commence in July and conclude in 2025, will allow for the integration of additional functionalities, including smart contracts, proposed by third parties.

This expansion of the pilot's scope aims to encourage private entities to propose new CBDC initiatives that go beyond the central bank's original drex design.

According to local reports, the primary reason for this decision is that the trialed privacy solutions did not demonstrate the "necessary maturity to ensure compliance with all requirements and legal issues related to safeguarding citizens' privacy."

Additionally, the bank emphasized that trials involving the general population "will only proceed when there is certainty about the ability to meet privacy requirements." Drex is being developed to be part of a blockchain system supported by Hyperledger Besu, which poses challenges in aligning standard transactions with the country's banking and tax secrecy regulations.

As a result, it will be infeasible for drex to be issued and tested this year, as noted by Fabio Araujo, the Central Bank of Brazil's digital real project coordinator in June. At that time, he underscored the importance of addressing the privacy issue, emphasizing the need to strike a "balance between privacy and utility, to develop products that ensure effective usability of digitThe Central Bank of Brazil has announced a delay in the completion of the drex pilot, Brazil's CBDC, citing the inadequacy of the privacy solutions proposed for the project thus far. The pilot will undergo a new phase, concluding in 2025, and will incorporate the implementation of smart contracts to support use cases suggested by private entities.

Brazilian CBDC Pilot Postponed to 2025; Privacy Solutions Deemed Insufficient for Trials Involving the General Population

The central bank recently disclosed a postponement of the drex pilot, Brazil's central bank digital currency (CBDC), until 2025 due to the shortcomings of the privacy solutions presented for the project. A new pilot phase, set to commence in July and conclude in 2025, will allow for the integration of additional functionalities, including smart contracts, proposed by third parties.

This expansion of the pilot's scope aims to encourage private entities to propose new CBDC initiatives that go beyond the central bank's original drex design.

According to local reports, the primary reason for this decision is that the trialed privacy solutions did not demonstrate the "necessary maturity to ensure compliance with all requirements and legal issues related to safeguarding citizens' privacy."

Additionally, the bank emphasized that trials involving the general population "will only proceed when there is certainty about the ability to meet privacy requirements." Drex is being developed to be part of a blockchain system supported by Hyperledger Besu, which poses challenges in aligning standard transactions with the country's banking and tax secrecy regulations.

As a result, it will be infeasible for drex to be issued and tested this year, as noted by Fabio Araujo, the Central Bank of Brazil's digital real project coordinator in June. At that time, he underscored the importance of addressing the privacy issue, emphasizing the need to strike a "balance between privacy and utility, to develop products that ensure effective usability of digital assets."al assets."