Brazil Central Bank opens applications for digital currency pilot project

The Central Bank of Brazil is receiving proposal applications from companies that wish to participate in the nation’s central bank digital currency pilot, Drex from Oct. 14 until Nov. 29.

Brazil Central Bank announced that it has already approved 13 cases featuring complex applications for the tokenized real including government-backed loans, agribusiness assets, assets in public networks, negotiations involving automobiles, carbon credit, debentures and real estate.

According to a Valor report, the Drex pilot’s Executive Management Committee will be receiving applications for the use of the digital real token from Oct. 14 to Nov. 29.

This marks the second phase of the central bank digital currency pilot project, Drex. The Central Bank wants to expand the number of participants and receive more complex use cases than those tested in the first phase.

The first phase of testing the pilot project involved 16 consortiums, most of them led by banks, registering to use real in a decentralized digital network through bank deposits and the exchange of federal government bonds in the “tokenized” version.

The bank also stated that applicants should continue to test their privacy solutions, as four entrants are still unable to solve the problem of “hiding” transactions between participants in a scalable way.

Drex is a digital currency created by the Brazil Central Bank that aims to create a “tokenization” infrastructure in the Brazilian financial system.

Regarding the use of digital currency in Brazil, President of the Brazilian Securities and Exchange Commission, João Pedro Nascimento, remarked that that tokenization is a business model that is “here to stay” and that the crypto industry must be brought into the financial system in a way that is “regulatory-compliant”.

Furthermore, Nascimento added that integrating traditional financial assets into the blockchain will pave the way for improved distribution of investment products.

Brazil’s efforts to develop their CBDC follows a global trend. According to data from Atlantic Council, as many as 134 countries are considering CBDC. Brazil is one of the 65 countries that are already in the advanced stages of developing CBDC.

By Oct. 11, China’s own CBDC, the digital renminbi or e-CNY, has registered 180 million personal wallets and a total transaction volume of ¥7.3 trillion yuan or equal to $1.02 trillion.