Brazil’s central bank has granted authorization to Mercado Bitcoin, the largest local cryptocurrency exchange, to participate in the pilot program for the country’s central bank digital currency (CBDC), known as the digital real. This move comes after Mercado Bitcoin obtained a payment institution license from the central bank, highlighting the regulator’s intention to collaborate with technology-driven innovators.
Mercado Bitcoin, in collaboration with a consortium that includes Mastercard, broker Genial, registrar Cerc, and financial software fintech Sinqia, will join other participants, including state-owned Brazilian bank Caixa, card provider Elo, and technology giant Microsoft. The consortium’s diverse expertise positions it well to contribute to the development of the digital real ecosystem.
Fabricio Tota, Director of New Business at Mercado Bitcoin, expressed enthusiasm about the exchange’s inclusion, emphasizing the importance of involving organizations already immersed in this technology rather than solely relying on established incumbents. This move aligns with the central bank’s goal of fostering innovation and increasing financial inclusion through the digital real.
Walter Pimenta, Executive Vice President of Products and Engineering at Mastercard Latin America and the Caribbean, highlighted Mastercard’s commitment to building trust and compliance in the digital assets ecosystem. The company views participation in the CBDC pilot as an opportunity to solve real-world problems and forge partnerships that will shape the future of digital currencies.
The pilot program, slated to begin in mid-June 2023, will serve as a testing ground for the issuance of the CBDC and treasury bills. Additionally, the consortium aims to explore technical aspects of the network and the governance model of the distributed ledger technology. This phased approach allows the central bank to evaluate the CBDC’s privacy, programmability, and interoperability within a controlled environment before potentially scaling up its implementation.
Brazil’s decision to involve global players like Microsoft and Visa underscores its commitment to leveraging international expertise and partnerships in the CBDC project. Visa, for instance, has developed a platform to assist Brazilian farmers in enhancing contract negotiations, demonstrating the versatility and broader applications of CBDCs beyond traditional finance.
Looking back, Brazil’s central bank had announced its intention to introduce the digital real in a groundbreaking pilot project. The final list of participants, released recently, includes prominent organizations such as Microsoft, Visa, Santander, and major Brazilian banking institutions. The pilot will initially focus on a delivery versus payment protocol for federal public securities, enabling the central bank to assess the viability and effectiveness of the CBDC in a controlled environment.
Moreover, the central bank’s president, Roberto Campos Neto, had unveiled the concept of an “all in one wallet” that combines the digital real with traditional institutions and decentralized financial organizations. This integrated approach aims to provide users with a comprehensive overview of their savings, both traditional and crypto-based, through a unified “super app” connected to the existing PIX payments network.
The rollout of Brazil’s CBDC by 2024, as envisioned by the central bank, holds the potential to revolutionize the country’s financial system, fostering greater financial inclusion and opening new avenues for digital transactions. By embracing technology and collaborating with industry leaders, Brazil aims to position itself at the forefront of global financial innovation.
With the inclusion of Mercado Bitcoin and other influential participants, Brazil’s CBDC pilot signals a significant step toward the future of digital currencies, offering a glimpse of the transformative potential that awaits the country’s payment and finance sector.