- Privacy solutions proposed for Drex failed to meet the central bank’s standards, leading to resource cuts and slowing down the project.
- Major external partners, including Microsoft and EY, have reduced their involvement due to lack of central bank support, impacting the project’s momentum.
- Despite recent tests, there has been no official statement from the central bank, and Drex’s future direction is still under deliberation.
The project to launch the pilot of the Brazilian central bank’ digital currency, known as ‘Drex’, is encountering numerous hurdles, among them, key external partners are stepping away from the project, slowing things down and losing momentum. Local media reports indicate that there have been major cuts in the presence of Microsoft and Ernst & Young (EY) on Drex related projects, as in the midst of the second pilot phase, the central bank just failed to support these efforts.
Resource Cuts Due to Privacy Failures in Drex
Failure to provide even a single one of the privacy solutions presented by the participating companies in the pilot’s second phase is directly associated with reduced resources assigned to the project, and it all goes down to the failure of the central bank to approve any of the privacy solutions proposed by the companies in the pilot’s second phase.
EY, the one leading the Starlight privacy solution, recently lost three employees, claims Valor Economico. Following its commitment of significant resources to the ZKP Nova privacy project last year, Microsoft has closed down its involvement in the privacy initiative similarly. Yet the Hamsa, a Microsoft Partner, will continue to support and test the ZKP Nova proposal.
The problem at hand lies with some of the proposed privacy solutions that do not comply with such stringent requirements. Expected to protect transaction confidentiality and, at the same time, protect regulators from money laundering, none of the submissions fulfilled the central bank’s standards.
No Official Statement on Drex’s Future Direction
For a couple of months, there has been no official statement from the central bank concerning the Drex future direction since the February report, when it was found that none of the privacy solutions met the central bank’s conditions. Recently, the executive secretary of the central bank, Rogerio Lucca, said that the Drex team is still working on the future of the project. The results of the just completed tests were not revealed by Lucca, but he said the technical teams are currently discussing future steps for the project based on the results of the tests that are underway.
Currently, the future of Drex remains unclear as the central bank is still deliberating on the following step with the digital currency initiative.
