{"id":95317,"date":"2025-08-08T15:29:10","date_gmt":"2025-08-08T18:29:10","guid":{"rendered":"https:\/\/murray.adv.br\/?p=95317"},"modified":"2025-08-08T15:29:10","modified_gmt":"2025-08-08T18:29:10","slug":"central-bank-drops-blockchain-for-next-phase-of-drex","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/central-bank-drops-blockchain-for-next-phase-of-drex\/","title":{"rendered":"Central Bank drops blockchain for next phase of Drex"},"content":{"rendered":"
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Brazil\u2019s digital currency to debut by 2026 in reduced form without tokenization, surprising some in the market and raising questions<\/strong><\/em><\/h6>\n<\/div>\n<\/div>\n
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08\/08\/2025\u00a0<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n

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In its next phase, Brazil\u2019s Central Bank (BC) will drop plans to develop a complex distributed ledger technology (DLT) system for digital assets in the financial sector. Instead, the Drex project will focus on a more modest goal: creating a lien reconciliation solution that will pave the way for credit operations backed by a variety of collateral types\u2014targeted for rollout in 2026.<\/p>\n<\/div>\n

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The shift, seen as a major change in direction, will postpone the use of decentralized networks similar to those in cryptocurrencies\u2014features that would have enabled programmable money, peer-to-peer lending, and other disintermediated financial transactions as originally envisioned.<\/p>\n<\/div>\n

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The change in focus was first disclosed by BC Auditor Clarissa Souza during a panel at Blockchain Rio. Fabio Araujo, the BC\u2019s Drex coordinator, later confirmed the move in an interview with Valor.<\/p>\n<\/div>\n

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Mr. Araujo said the project will now be split into two timelines: one to deliver a service to the public in the short term without a decentralized network, and another to mature that technology over time. He explained that lien reconciliation will ensure an asset registered at a brokerage can be used as loan collateral, with all the different systems involved communicating with one another.<\/p>\n<\/div>\n

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Originally, this was to be done using Hyperledger Besu, the DLT platform the BC chose in 2023 as Drex\u2019s infrastructure. Besu is a permissioned protocol compatible with Ethereum smart contracts. The idea has now been shelved because developing all the needed solutions on that network proved unfeasible in the short term.<\/p>\n<\/div>\n

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One of the biggest hurdles has been implementing a privacy solution for Drex within Hyperledger that preserves programmability and composability. Three tools were tested in the project\u2019s first phase, with none fully satisfying the BC. Three more options emerged in the second phase.<\/p>\n<\/div>\n

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Mr. Araujo said current privacy solutions are strong but require significant additional work, development, and adaptation before they can serve as the foundation for a decentralized financial system. \u201cWe found good privacy solutions, but apparently it\u2019s not enough. We need to put this to the test,\u201d he said.<\/p>\n<\/div>\n

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Marcos Sarres, CEO of GoLedger\u2014part of the Hyperledger Foundation\u2014said there is no indication Hyperledger Besu will continue to be used when DLT returns to Drex\u2019s roadmap. Mr. Sarres acknowledged that Besu was not ideal for the project due to its limitations.<\/p>\n<\/div>\n

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\u201cThere are technologies already designed with privacy and scalability in mind\u2014you don\u2019t have to build them from scratch,\u201d he said, citing Hyperledger Fabric as an example. Fabric recently upgraded to handle up to 200 million transactions per second, from 20 million previously. Brazil\u2019s Federal Revenue Service already uses Hyperledger Fabric in its b-Cadastros database-sharing program.<\/p>\n<\/div>\n

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The BC has yet to say what technology will power lien reconciliation for secured lending. Even members of the private-sector consortia currently testing Drex said they were surprised by the decision.<\/p>\n<\/div>\n

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Marcos Viriato, CEO of Parfin\u2014developer of one of Drex\u2019s privacy solutions\u2014suggested that asset transfers in the third phase could be processed through Brazil\u2019s Pix instant payment system. \u201cIt\u2019s like they\u2019ve said before\u2014they want integration with Pix,\u201d he said.<\/p>\n<\/div>\n

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At the end of July, the 16 private-sector consortia involved in Drex submitted reports on their tests of 13 tokenization use cases. The BC will release a comprehensive report on the second phase by October. It is unclear when the third phase\u2014focused on collateralized lending\u2014will begin, though it is expected later this year.<\/p>\n<\/div>\n

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The tested use cases were far broader than what will now be delivered, including tokenized property sales. According to Araujo, DLT-dependent solutions will be discussed and developed in later phases, after lien reconciliation is in place.<\/p>\n<\/div>\n

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The future involvement of the 16 current consortia is uncertain. Beyond technical challenges, Drex has also become a political flashpoint. The debate intensified when U.S. President Donald Trump backed legislation to bar the Federal Reserve from creating a central bank digital currency (CBDC), prompting Brazilian politicians to criticize Drex.<\/p>\n<\/div>\n

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Companies in the Drex pilot expressed surprise at the sharp shift but said it would not derail tokenization efforts in Brazil. Jo\u00e3o Canhada, founder of crypto exchange Foxbit, said the tokenization market was already advancing independently of Drex. \u201cYes, there would have been more opportunities if Drex had been rolled out as previously discussed. But today\u2019s tokenization market is not anchored to what Drex will deliver in the future,\u201d he said.<\/p>\n<\/div>\n

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Andr\u00e9 Portilho, head of digital assets at BTG Pactual\u2014also part of the pilot\u2014called the BC\u2019s phased approach \u201cpragmatic and correct\u201d as it keeps the project and long-term vision intact while matching implementation to technology maturity.<\/p>\n<\/div>\n

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Jo\u00e3o Arag\u00e3o, technology and financial services innovation specialist at Inter bank, said the bank tokenized soybean trades and implemented interoperability features in Drex\u2019s second phase. He stressed that the experience was not lost with the change in direction. \u201cWe\u2019re all moving toward [future] virtual asset service provider licenses and have other projects we want to roll out. We will continue working on tokenization,\u201d he said.<\/p>\n<\/div>\n

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In a statement, the Brazilian Federation of Banks (Febraban) expressed confidence that the BC is developing Drex with the caution needed to meet efficiency, security, and stability requirements. \u201cWe remain firmly in the group supporting the creation of the Drex platform and are working within the ongoing Technical Cooperation Agreement,\u201d it said.<\/p>\n

*By\u00a0Ricardo Bomfim, Valor\u00a0\u2014 Rio de Janeiro<\/p>\n

Source: Valor International<\/p>\n

https:\/\/valorinternational.globo.com\/<\/p>\n<\/div>\n

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Brazil\u2019s digital currency to debut by 2026 in reduced form without tokenization, surprising some in the market and raising questions         08\/08\/2025\u00a0 In its next phase, Brazil\u2019s Central Bank (BC) will drop plans to develop a complex distributed ledger technology (DLT) system for digital assets in the financial sector. 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