The Central Bank of Brazil (BCB) is advancing the timeline for its central bank digital currency (CBDC), known as Drex, with a target launch set for 2026. The bank has opted for a centralized model, moving away from an initial design that heavily relied on blockchain technology. This shift aims to address unresolved challenges related to privacy and security, while ensuring faster and more controlled implementation [1].

Originally, Drex was envisioned to leverage blockchain for features such as peer-to-peer transactions, programmable money, and decentralized finance. However, the BCB confirmed that current blockchain privacy solutions do not meet Brazil’s stringent financial secrecy requirements. As a result, the first phase of the rollout will feature a centralized system, with blockchain-based elements expected to be explored in a later stage [1].

Since July 2023, 16 private-sector consortia have participated in pilot trials of Drex, including initiatives like tokenized property sales, trade finance, and cross-border payments. Major partners such as Microsoft, Chainlink, and Banco Inter have been involved, with Microsoft providing cloud infrastructure for some operations. Despite the centralization of the system, these partners remain optimistic about the future role of blockchain in Brazil’s tokenized economy [1].

The new architecture raises questions about the feasibility of some pilot use cases, as the reduced programmability of the centralized system may impact their functionality. Additionally, it is unclear whether Hyperledger Besu, the Ethereum-compatible blockchain platform adopted in 2023, will remain part of the project [1].

According to Fabio Araujo, who coordinates the Drex project, the implementation will occur in two phases. The first phase, launching in 2025, will not include decentralized features. The second phase will focus on experimenting with and optimizing blockchain-based components [1].

The BCB emphasized that Drex will evolve over time, beginning with simpler functionalities and gradually incorporating more advanced features. The bank is also working to balance user privacy with regulatory compliance, ensuring that the CBDC supports financial oversight without compromising individual confidentiality [1].

This decision comes amid global discussions about CBDCs, with some projects facing delays or cancellations due to political and technological challenges. The BCB’s pragmatic approach reflects its focus on practical innovation, citing the success of Pix—Brazil’s fast payments system—as a model for adoption [1].

The second-phase pilot will run until November 29, 2025, demonstrating the BCB’s continued collaboration with the private sector in developing the digital real. Drex remains a key component of Brazil’s digital transformation, aiming to support financial inclusion, cross-border payments, and monetary policy flexibility [1].

As Brazil accelerates its CBDC rollout, the world will be watching to see whether this moderate approach can meet domestic needs and serve as a model for other countries exploring similar initiatives [1].

Sources:

[1] news.bitcoin.com

[2] coinfomania.com