The launch of Drex, Brazil's central bank digital currency (CBDC), has been postponed. This is because the pilot testing period of the digital asset will now move to a second phase, since problems related to privacy were found. This was notified by the Central Bank of Brazil (BCB) in a statement released last week, in which they highlight that the second phase of the pilot of the also called digital real will take place in 2025. This, with the objective of «incorporating new functionalities and carrying out more tests, promoting the evolution and maturation of the platform.» Initially, it was proposed that the Drex pilot test would end in May 2024, so that its official launch would take place in 2025. But the extension of the testing phase means that the issuance of that CBDC will take longer than estimated. Drex, with its pilot tests, positioned Brazil as one of the most advanced countries in terms of the development of its own CBDC. As part of that first phase, interbank transactions were executed with the digital real, as reported by BitcoinDynamic. It was also known that this digital asset in the testing phase was used for the purchase and sale of vehicles. BV bank, one of the largest in the country, implemented a tool that allows car financing to be tokenized as part of a purchasing system. Due to its advances, the Brazilian asset received recognition from the International Monetary Fund (IMF). According to the international entity, the digital real or Drex is a «smart platform that promotes financial innovation», whose objective is «to create a public blockchain infrastructure in a regulated environment.»
Privacy flaws caused the delay
As indicated by the BCB, Drex's privacy technology solutions They did not show “the necessary maturity” to guarantee that all legal requirements, related to the preservation of citizens' privacy, are fully met. In other words, the BCB identified that, with the CBDC, Users may be victims of privacy risks. Something that, in the worst case, can lead to exposure of financial data, surveillance and loss of control. Now, concerns about the privacy of users of the digital real are already being expressed in Brazil. Last year it was warned that this Rio CBDC would grant power to the central bank to control people financially.
A study by local firm Lora Labs determined that, with Drex, the bank will be able to activate and deactivate users' digital wallets, as well as block and unlock the balance that is available in the wallets. In similar events, the digital real project entered a review phase last year, after specialists and analysts expressed concerns about that asset. Many of them agree with the idea that the Brazilian CBDC represents risks for users in that South American nation. However, CBDCs in general represent the financial control of the traditional monetary system, but brought to the new economy, as warned by members of the bitcoin (BTC) and cryptocurrency community, who point out that, through these centralized assets, Governments will exercise greater financial control over people.