1 year ago
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Mercado Bitcoin Joins CBDC Trials
Brazil’s central bank has authorized Mercado Bitcoin, Brazil’s largest cryptocurrency exchange, to participate in a pilot test of its central bank digital currency (CBDC). reported by local media.
The Brazilian central bank said it decided to join the project because it believed that Mercado Bitcoin would play a beneficial role in the use of blockchain technology and cryptocurrencies.
Mercado Bitcoin was not selected when the Brazilian central bank announced its participants in the CBDC project in May this year.
The reason for this was that it did not have a license to access the Brazilian financial network. Mercado Bitcoin obtained a license as a payment institution from the Brazilian central bank on June 2, and is now able to participate.
Mercado Bitcoin New Business Director Fabricio Tota commented:
Our acceptance to participate proves that the central bank intends to work with companies already working on technologies such as blockchain to innovate the financial system.
The Brazilian central bank has also announced payment giant Mastercard, fintech company Sinqia, brokerage firm Genial and others as project participants. Brazil’s state-owned bank, Caixa Bank, was also selected.
What are CBDCs
A digital currency issued by the central bank of a country or region. It stands for “Central Bank Digital Currency”. The big difference from virtual currency is that CBDC is a legal tender. While it is expected to reduce costs and improve efficiency in currency management and settlement, there are many issues to be considered, such as protection of personal information and privacy, security measures, and impact on the financial system.
Cryptocurrency Glossary
Details of the demonstration experiment
In May, the central bank of Brazil announced the first companies to participate in the CBDC Digital Real demonstration project. At this time, 14 banks and companies were selected, including payment major VISA, Santander Bank, Itau Uni Bank, and Microsoft.
The first phase of the proof-of-concept will focus on privacy and programmability features, and will test settlement of government bonds. Instant wholesale (bank-to-bank) and end-user level settlement of bond ownership and cash concurrent transactions.
Brazil’s central bank governor, Roberto Campos Neto, has said he aims to launch a CBDC by the end of 2024 after conducting a private pilot program with financial institutions.
Neto also said Brazil’s CBDC is designed to facilitate the asset tokenization of commercial banks.
Development of virtual currency regulations progresses
In Brazil, the development of virtual currency regulations is underway.
The Brazilian central bank was also recently appointed as Brazil’s cryptocurrency regulator. The relevant bills have officially entered into force on June 20.
According to the law, Brazilian companies cannot offer cryptocurrency services without approval from the central bank. The central bank will also monitor whether companies comply with anti-money laundering procedures and are not linked to criminal activities such as terrorist financing.
In December 2010, a law was enacted that provides a legal basis for using virtual currency as a means of payment. The law also stipulates separate management of virtual currency exchanges and their user assets, and penalties for fraud using virtual currency.
connection: Brazil enacts law to allow cryptocurrency payments
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