The Central Bank of Brazil (BCB) has officially disclosed 13 new use cases to be tested in the second phase of its ongoing central bank digital currency (CBDC) pilot, known as Drex. These use cases were selected from 46 proposals submitted by 16 consortia, reflecting the central bank's ambition to explore a wide range of real-world applications for its digital currency.
Diverse Use Cases Spanning Key Sectors
The approved use cases cover six major areas: real estate tokenization platforms, liquidity pools for trading government bonds, international trade financing, automation of automobile transactions, collateralized credit assignment, and government securities trading. All scenarios will be tested on the Drex blockchain environment to validate both technical feasibility and commercial viability.
The list of participating institutions is impressive, including Brazilian crypto exchange Mercado Bitcoin, the country's stock exchange B3, global bank Santander, payment firm Tecban, XP-Visa, Banco do Brasil, Bradesco, Itaú, Banco Inter, Nubank, and the Brazilian Association of Banks. This diverse mix ensures comprehensive coverage from traditional finance players to emerging crypto-native enterprises.
Privacy Protection Remains a Hurdle
Bruno Grossi, emerging technologies manager at Banco Inter, told Valor Economico that beyond testing the feasibility of the approved use cases, all participants must comply with privacy solutions that hide transaction details to preserve banking secrecy in the network. “Each use case will be tested by everyone. Collaboration will always be welcome,” Grossi stated.
The privacy issue was the main reason the central bank postponed the completion of the Drex pilot phase to 2025 and created this new experimental phase. In May 2024, the BCB said the solutions trialed lacked the “necessary maturity to guarantee compliance with all requirements and legal issues related to the preservation of citizens’ privacy.”
Global Implications of Brazil's Drex Pilot
Brazil launched the Drex pilot in 2023, initially planning to complete the first phase by the end of 2024. With the expansion to this second phase, Brazil has become one of the most active countries in CBDC exploration globally. Data shows that over 100 countries are now exploring CBDCs, but only a handful have reached a practical pilot stage. Brazil’s experience will provide valuable lessons for other emerging economies, especially regarding the core tension between blockchain transparency and financial privacy.
Notably, the selected use cases include tokenized real estate and automated car transactions, which are closely tied to the real economy. If these scenarios are eventually commercialized, they could significantly reduce asset transaction costs, shorten settlement times, and potentially reshape Brazil’s asset registration and transfer systems.
According to the central bank's timeline, the second phase of testing is expected to run until mid-2025. Based on the outcomes, the BCB will decide whether to expand Drex’s scope or proceed toward an official launch.