Brazil's central bank (BCB) has decided to strip the majority of blockchain and tokenization components from its central bank digital currency (CBDC) project, known as Drex, in order to accelerate its launch to 2026. The move was confirmed by Fabio Araujo, coordinator of the Drex project, who outlined a two-phase delivery plan.
Two-Phase Strategy: Centralized First, Decentralized Later
The first phase, expected to launch next year, will feature a fully centralized architecture without decentralized elements. The second phase will gradually implement and mature blockchain technologies. This means the original plan to use Hyperledger Besu—an Ethereum-compatible permissioned blockchain chosen in 2023—has been postponed. Without programmability, many use cases tested during the pilot, such as smart contract automation, cannot be implemented in the initial version.
Privacy as the Key Bottleneck
The central bank explicitly attributed the change to the inadequacy of privacy solutions tested for the decentralized version. “We found good privacy solutions, but apparently they are not enough. We need to put this to the test,” Araujo stated. In 2024, the bank already postponed the Drex pilot due to privacy inefficiencies—solutions failed to provide bank-level secrecy and verifiability demanded by regulators.
Trade-Offs and Immediate Benefits
While the centralized Drex sacrifices advanced features like programmability and decentralization, it will deliver a crucial lien reconciliation mechanism. This functionality will enable credit operations backed by various collateral types, such as deposits or government bonds, unlocking new lending possibilities. The specific tools to support this have not yet been announced.
The bank stressed that abandoning blockchain is not permanent. The second phase will reintroduce distributed ledger technology once privacy solutions mature. It remains unclear whether Hyperledger Besu will still be used or if another platform will be selected.
Global Implications
Brazil's pragmatic approach mirrors decisions by other central banks, such as Sweden's e-krona, which also opted for a centralized database over blockchain. The Brazilian case highlights a growing trend: CBDC projects may prioritize speed and regulatory compliance over technological novelty, especially in emerging economies. The centralized Drex will still advance financial inclusion and payment efficiency, even without the “blockchain” label.
The 2026 launch will mark a milestone for Brazil's digital currency journey. If privacy technology evolves, the bank can later upgrade Drex to a true decentralized digital real. For now, the focus is on delivering a working, secure, and regulated CBDC to the public.