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Brazil's CBDC pilot project Drex is blocked on privacy solutions due to weakened support from external partners

On April 11, it was reported that the Brazilian central bank's digital currency (CBDC) pilot project Drex is facing difficulties. Due to the reduction of resources allocated to the project, the progress of the project has been slowed down and the development of the project has been hindered. The two largest companies involved in the design of the project's privacy solutions, Microsoft and Ernest & Young, have recently reduced the manpower devoted to these efforts. The impasse is related to the recent actions of the central bank, which ended the second phase of the Drex pilot without approving any projects submitted by the participants. The Drex project is currently stalled because none of the privacy proposals that need to guarantee the confidentiality of transactions while allowing regulators to review them meet the central bank's requirements in this regard. Ernest & Young, who currently runs the Starlight privacy project, has lost three people involved in the development of the solution. At the same time, Microsoft has also reduced its participation in its ZKP Nova privacy proposal after investing a lot of resources last year. However, Microsoft partner Hamsa will continue to test and support ZKP Nova. Rogerio Lucca, executive secretary of the central bank, recently pointed out that the team behind drex is still working on the future of the project. "Based on the results of ongoing tests, the technical team is currently discussing possible future steps for the project," he said. But it did not disclose the test results.