According to local media reports, Brazil’s central bank had to abandon the decentralized elements of CBDC to provide solutions in 2026 due to the immaturity of the privacy solutions presented.
Brazilian CBDC abandoning blockchain to launch in 2026
The Brazilian Central Bank aims to accelerate the development of central banks’ digital currency to provide practical solutions as quickly as possible. Local media reports say Drex, the Brazilian Central Bank’s digital currency (CBDC), will target the launch date in 2026, abandoning most of its tokenization and blockchain elements.
Fabio Araujo, coordinator of the central bank’s DREX project, confirmed the changes and said the new proposal will be offered in two phases. The first phase does not include decentralized aspects, with expected releases next year, and the second phase will continue to implement and mature blockchain technology.
Centralized DREX implementation means that many of the use cases tested in two phases of the pilot cannot be implemented given the lack of programmaticity of the underlying architecture. Furthermore, there is no guarantee that we will continue to use Hyperledger BESU, the open source Ethereum compatible blockchain platform solution chosen for DREX in 2023.
Araujo said the privacy solutions presented for the currently dropped decentralized version of DREX need to be improved to become part of the security structure of the Brazilian financial system. “We’re finding great privacy solutions, but obviously they’re not enough. We need to test this,” he told Valor Economico.
Privacy has been an obstacle to DREX’s decentralized ambitions since last year when the central bank announced its pilot postponement due to inefficiency in the privacy solutions presented.
Nevertheless, the centralized version of DREX offers a lien settlement solution. The tools needed to implement this feature have not been announced yet.
Read more: Digital Real Pilot Runs on Ethereum-compatible, permitted blockchain
Read more: Brazilian CBDC pilot postponed to 2025 due to inefficiency in privacy solutions
