Brazil to launch digital tests of CBDC

Tuesday 14 February 2023 08:06 CET | News

Brazil has announced its plans to launch a real-world suite of digital tests for its CBDC, focusing on protecting the privacy of financial data and transactions.

The aim of this new launch is to make its CBDC more secure and private for its customers to use. 

The preparation process for the debut is still under evaluation, and in the end, the Central Bank of Brazil will issue a kind of digital currency (CBDC), which, when ready, will be authorised to go well underway. As the testing period is reportedly close to its ending, the financial institution has already named and determined two primary areas where the solution will concentrate. These will be the spheres of privacy and the spheres of safety, which will be the main focus of the project as it works towards its debut in the industry. 

During the experimental phase, the digital currency will be used in different areas and with different functions. An example will be the use of it in a transaction process, involving a tokenised form of an asset that is yet unnamed while focusing on discovering the degree of security and privacy these transactions can have. Focusing on the safety of data, the new feature wants to ensure that even in the cases where information is leaked from the platform, this will not violate the given restrictions from the place. 

Being in its testing phase, the platform is a component of a feature called the `LIFT challenge`. The LIFT challenge refers to an open initiative that is being participated by a bigger number of organisations.

Any of those organisations need to meet a set of requirements in order to be part of the challenge, such as handing in their different project reports or files on or by April 25th at the latest. After that, the pilot testing process for the digital real may be allowed to go underway. 

After the release, the pilot will be further carried within a restricted and well-controlled scope, while the sole tokenised asset which will be used for transactions will be the one to become recognised by the industry. 

Currently, the examination will be extended if needed, in order to cover third parties, including financial institutions, banks, and other establishments. Although the process is in good progress, the testing environment will most likely be extended beyond 2024. This might happen because of the overall aim to prioritise enabling customers with an improved level of security and discretion that the system can provide while having multiple participants share information and data in order to make sure everything is raised at the level of their expectations and needs.

Brazil has announced its plans to launch a real-world suite of digital tests for its CDBC, focusing on protecting the privacy of financial data and transactions.

Brazil’s new regulations on digital assets

The press release made about the preparation of the digital tests of CBDC followed the announcement of the new Brazilian regulation on digital assets and how these might impact the industry. 

At least 27 countries were already working on formulating the regulations, and in Brazil, Congress approved a bill that regulated these assets in the area. This allowed the country to bring concepts and principles that should guide the provision of services and solutions in the crypto assets market while empowering the authorities to be designated to finetune the regulation. While it hasn’t been confirmed, it is expected that this role will be played by the Central Bank of Brazil (BCB) and the Securities and Exchange Commission of Brazil (CVM). 

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Keywords: product launch, fraud prevention, cryptocurrency, digital currency, fraud management, CBDC
Categories: DeFi & Crypto & Web3
Companies: Central Bank of Brazil
Countries: Brazil
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DeFi & Crypto & Web3

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