The decision followed a meeting on Tuesday (4) between the Central Bank and private-sector consortia involved in the project. Valor had already reported in August that the Drex platform based on distributed ledger technology (DLT) would not be used in the next stage of development. Discussions for phase three are expected to begin in early 2026.

Experts say the weakening of Drex opens the door to privately issued tokenized assets and stablecoins, which may replace a state-backed CBDC.

Shift to private alternatives

Stablecoins are cryptocurrencies pegged 1:1 to traditional currencies, offering the programmability of digital assets without the need for intermediaries to settle transactions.

Henrique Teixeira, Latin America head of tokenization platform Hamsa, said shutting down Drex is a “cold shower” for those involved in its development but does not mean the end of tokenization in Brazil. “Banks are likely to develop their own stablecoins now,” he said.

In April, Itaú Unibanco said it was exploring the possibility of launching its own stablecoin, pending regulation from the Central Bank, which is expected this month.

Mr. Teixeira pointed to Safra Bank as a model: in September, it issued a dollar-pegged stablecoin to provide clients with exchange rate exposure at lower cost, avoiding Brazil’s financial transactions tax (IOF) and traditional foreign exchange market fees.

Banks could also launch real-pegged stablecoins to settle transactions involving tokenized assets that are currently outside the crypto world, such as debentures, receivables, and investment funds. “Initially, the winners will be those who can move fastest. Larger banks, in the S1 and S2 categories—which include financial institutions with the largest volume of assets and most systemic importance in Brazil—have more resources and expertise, giving them an edge,” he said.

Banking groups back decision

The Brazilian Federation of Banks (FEBRABAN) said in a statement that shutting down the platform reflects the Central Bank’s commitment to “security and stability in the future infrastructure.” The federation added that it remains part of the Drex support group.

The Brazilian Association of Banks (ABBC), which represents smaller institutions, said that even with the current platform shut down, its member banks have the technology to connect their Drex use cases to other networks. ABBC had been testing the tokenization of Bank Credit Notes (CCBs) in the project.

Blockchain provider BBChain, part of ABBC’s Drex consortium, said phase two “fulfilled its purpose” and that the Central Bank recognized the need for further technological evolution. “New market-driven business models may meet requirements without the regulatory constraints of the pilot,” the company said.

Stablecoin trend mirrors global shift

The growing preference for stablecoins over CBDCs aligns with global trends. Shortly after taking office, President Donald Trump signed an executive order banning the creation of a U.S. CBDC and encouraging the use of private stablecoins.

Drex was launched in 2023 with a pilot focused on tokenizing deposits and transactions in federal government bonds. The second phase, launched in October 2024, is expected to conclude with a final report in early 2026. Both phases used a DLT network as the testing platform.

Phase three will continue with business case studies for Drex but on a technology-neutral basis. Privacy solutions tested earlier failed to strike the balance between ensuring transaction confidentiality and maintaining Central Bank oversight. Looking ahead, one of Drex’s goals is to resume tokenization studies to create a settlement environment where the currency is issued by the Central Bank.