Brazil's CBDC pilot project Drex faces obstacles in privacy solutions as external partners' support weakens

On April 11th, according to Bitcoin.com, Brazil's central bank digital currency (CBDC) pilot project Drex is facing difficulties. Due to a reduction in resources allocated to the project, progress has slowed down and development has been hindered. The two largest companies involved in designing privacy solutions for this project - Microsoft and Ernst Young - have recently reduced the manpower dedicated to these efforts. This deadlock is related to recent actions by the central bank, which ended the second phase of the Drex pilot without approving any projects submitted by participants. As the privacy proposals that need to ensure transaction confidentiality while allowing regulatory scrutiny did not meet the central bank's requirements in this regard, the Drex project is currently at a standstill.

Ernst Young, currently responsible for the Starlight privacy project, has lost three personnel involved in the development of this solution. Meanwhile, after investing heavily last year, Microsoft has reduced its involvement in the ZKP Nova privacy proposal. However, Microsoft's partner Hamsa will continue to test and support ZKP Nova. Central bank executive secretary Rogerio Lucca recently pointed out that the team behind Drex is still studying the future of the project. He stated: "Based on the results of ongoing tests, the technical team is currently discussing possible future steps for the project." But he did not disclose the test results.