Brazil Central Bank expands Drex CBDC pilot to test tokenized assets, privacy solutions, and advanced use cases in finance.
The Brazilian Central Bank has announced the expansion of its Central Bank Digital Currency (CBDC) pilot, Drex, opening it to new participants. The move aims to test more complex use cases and privacy solutions in the project’s second phase. The Central Bank of Brazil invites companies to join the initiative. This is focused on creating a “tokenization” infrastructure for the country’s financial system.
Currently, Drex has 16 consortia, mostly headed by banks. On the other hand, it has already piloted the digital representation of Brazilian real estate through decentralized bank deposits and government securities. For this new phase, 13 use cases have been confirmed for testing. These are asset-backed loans, carbon credits, agri-business bonds, and foreign trade platforms.
The second phase of Drex will also address privacy solutions. Four privacy solutions, Zether, Starlight, Rayls, and ZKP Nova, were mentioned earlier in the project, but none of them could effectively “hide” the transactions from the participant parties at scale. The Central Bank is expecting this challenge and has invited new solutions regarding privacy and called for new proposals to tackle issues. These will be assessed by Drex’s CEG Executive Management Committee from October 14 to November 29.
Drex CBDC to Test Tokenized Automobiles, Real Estate Transactions
Drex envisions enhancing the Brazilian financial system by tokenizing many assets. These assets include such as government securities and international trade finances. It aims to increase turnover and improve the workings of the domestic and foreign markets. The pilot’s expansion also includes additional use cases, including receivables assignment, collateralized credit, and even transactions with automobiles, carbon, and real estate.
In addition to the technical side of the project, João Pedro Nascimento, the president of the Brazilian Securities and Exchange Commission (CVM), discussed the need for asset tokenization. He said that registering traditional financial assets using blockchain could enhance the selling of investment products. Moreover, he noted that tokenization is a sustainable business model.
However, not everyone seems convinced that the move to blockchain will usher in this sort of transformation. George Marcel Smetana is an Innovation Specialist at Bradesco. He noted that sometimes, blockchain technology could solve one intermediary with another instead of eliminating intermediaries.
Jochen Mielke de Lima is CEO of B3 Digitas. He highlighted the challenges of fully delegating the role of a central depository to technology. He stressed the importance of governance in distributed systems and maintaining the integrity of the asset management process.
As Brazil progresses with its CBDC pilot, the project’s second phase will be closely watched, particularly for how it addresses scalability, privacy, and the role of intermediaries.
