Privacy problems have prevented progress in Brazil Central Bank digital currency (CBDC) In the ongoing pilot phase, a new report from the country’s top bank has revealed.
On one paper describes the first phase of the CBDC pilot, Brasil’s central bank (BCB) found that although the publication, distribution and redemption of Drex -Digital currency were relatively simple, it met with the technical aspects. The First phase Began in March 2023 and ended over a year later in May 2024. The second phase would start immediately, but where delayed over privacy problems; It started at the end of last year.
The essay revealed that the Central Bank explored four different confidentiality solutions, but no one fully solved the challenge.
The first two solutions – confidential computer use and centralized restriction – were quickly dismissed. The latter goes toward Decentralization ethos That BCB believes will be crucial to the success of Drex. The bank is based on CBDC on a DLT-based uniform book for improved transparency and efficiency. DLT also allows Integration of smart contracts And tokenization.
While confidential computers offer much -needed integrity, it was dismissed because it relies on third parties, which also contravene decentralization and create central failures.
The two solutions that did better were zero knowledge and network segregation. The latter falls somewhere between the overlay network on bitcoin and Layer 2 Networks on other blockchains. While Overlay on bitcoin Has proven to work, offer integrity and customizable access, Layer 2S has not succeeded as well. Cyber criminals have routinely directed the bridges that connect these networks; Axie infinity and Poly networks Lost over $ 600 million each in Bridge Hacks.
That leaves Zero knowledge certificate (Zkps). Here, BCB solutions tested as Zether from JPMorgan (Nasdaq: JPM), Starlight from Ernst & Young and Rayls, a ZKP solution at Ethereum’s EVM. It also tested ZKP Nova from Microsoft (Nasdaq: MSFT), but the essay was written before the results were analyzed.
While ZKP improved integrity it came to a cost: BCB also lost access to the transactions and could not carry out monetary checks or KYC and AML programs.
“It is important that the authorities have visibility and control over the token to comply with their legal, regulatory or contractual obligations,” the bank concluded.
“Without this ability, the authorities could not monitor suspicious activity, prevent fraud or ensure compliance with applicable laws and regulations, which compromises the security and integrity of the Drex platform.”
Despite the backlash, the BCB presses the second phase, where it has expanded CBDC’s reach and works with more institutions. The bank received 101 Applications From interested parties but only selected 50 because some of the applicants had duplicated focus areas and proposed solutions.
Brazil is one of the countries stuck in developing a retail CBDC, which seems to have lost its appeal in recent years. Studies from BIS and other global organizations reveal that central banks are now more focused on wholesale CBDCs, especially in the developed world where existing digital payment solutions considered to be adequate.
Pakistan launches a “National Crypto Council”
Elsewhere, Pakistan intends to start a “National Crypto Council” to increase the adoption of digital access in the South Asian nation.
The initiative comes after Pakistan’s Finance Ministry recently held a meeting with a delegation of Digital Currency Leadership from the United States, “including President Trump’s digital assets adviser.”
A local withdrawal reports That among the participants was Gentry Beach Jr., an associated President Trump and whose father led campaign collection for the Republican leader. The beach has been on a tour of South Asia and his second latest Meetings in Pakistan has been generally covered. However, the US Embassy did not officially announce the meeting with the Ministry of Finance on digital assets.
The new Council will be a dedicated body consisting of important government officials, supervisory authorities and industry experts. It will work with new policy, lay the foundation for adoption and collaborate with other nations to determine regional standards.
The initiative signals a transition from the Pakistani government’s previous hostility to digital assets. As late as 2023, then Finance Minister Aisha Ghaus Pasha abandoned that “crypto will never be legalized in Pakistan.”
But the current minister, Muhammad Aurangzeb, has been friendlier against digital assets and demanded “an open mind” against the sector.
Pakistan ranked ninth globally for adoption of digital access last year, in accordance with to a chain analysis examination.
Look: Find ways to use CBDC outside digital currencies
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