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Mercado Bitcoin, the largest cryptocurrency exchange in Brazil, is set to take part in the nation’s pilot initiative to introduce a digital real.
The central bank plans to launch this financial product in 2024.
The List of Contributors
According to a local news source, Banco Central do Brasil has granted Mercado Bitcoin permission to engage in the development of the CBDC. Fabricio Tota, the exchange’s director of new business, commented on the situation:
“Our involvement confirms the Central Bank’s goal to introduce innovation into the financial system by collaborating with those who have been working with this technology rather than solely with established entities that have claimed it.”
Other contributors to the project include prominent firms such as the payment processing leader Mastercard, the financial software fintech Sinqia, brokerage firm Genial, among others.
Brazil’s central bank has previously indicated that only regulated financial institutions with direct access to the National Financial System (SFN) network are eligible to support the CBDC initiatives.
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The consortium aims to engage in all facets of the trial, encompassing wholesale, retail, and National Treasury securities transactions.
The central bank seeks to launch a CBDC next year. The initial proposal outlines that the monetary product will be a blockchain-based tool designed for retail transactions and supported by customer bank deposits.
“This could lower credit costs and enhance investment returns. There is significant potential for new service providers and fintechs, democratizing market access and introducing new services,” stated Fabio Araujo, the coordinator of the CBDC project.
Additional Crypto Jurisdiction for the Central Bank
In addition to overseeing the issuance of a digital real, Brazil’s central bank has recently been designated as the country’s cryptocurrency regulator. The legislation, signed by President Luiz Inácio Lula da Silva, became effective on June 20.
Under the new regulations, local firms are prohibited from offering crypto services without obtaining authorization from the financial institution. The bank will also ensure compliance with anti-money laundering regulations and monitor any connections to criminal activities, including terrorism financing.
Brazil’s SEC will also be involved in the regulatory framework. It will collaborate with Banco do Brasil to oversee digital currencies categorized as securities. It is important to note that current domestic legislation does not specify which assets fall into this category and which are classified as commodities.
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