The Brazilian CBDC pilot project Drex encounters obstacles in privacy solutions due to weakened support from external partners

According to Bitcoin.com, the Central Bank of Brazil's digital currency (CBDC) pilot project Drex is facing difficulties. The progress of the project has slowed down and its development has been hindered due to reduced resources allocated to it. The two largest companies involved in designing privacy solutions for this project - Microsoft and Ernst Young, have recently reduced manpower invested in these tasks. This stalemate is related to recent actions by the central bank, which ended the second phase of the Drex trial without approving any projects submitted by participants. As none of the privacy proposals that need to ensure transaction confidentiality while allowing regulatory scrutiny met the requirements set by central bank, Drex project is currently at a standstill.

Ernst Young, currently responsible for Starlight privacy project, has lost three staff members who were involved in developing this solution. Meanwhile, after investing heavily last year, Microsoft also scaled back its involvement with its ZKP Nova privacy proposal. However, Microsoft's partner Hamsa will continue testing and supporting ZKP Nova. Rogerio Lucca,the executive secretary of Central Bank recently pointed out that team behind drex are still studying future prospects for this project.He said: "Based on ongoing test results,the technical team is currently discussing possible next steps for this Project." But he did not disclose test results.