Brazil's CBDC pilot project Drex faces obstacles in privacy solutions due to weakened support from external partners

According to Bitcoin.com, the Brazilian central bank's digital currency (CBDC) pilot project Drex is facing difficulties due to reduced resources allocated to the project, slowing down its progress and hindering its development. The two largest companies involved in the design of privacy solutions for this project, Microsoft and Ernst&Young, have recently reduced the manpower invested in these tasks. This deadlock 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 participants. The Drex project is currently at a standstill due to privacy proposals that require ensuring transaction confidentiality while allowing regulatory scrutiny not meeting the requirements of the central bank in this regard. Ernst&Young, currently responsible for the Starlight privacy project, has lost three personnel involved in the development of the solution. At the same time, Microsoft also reduced its involvement in its ZKP Nova privacy proposal after investing significant resources last year. However, Microsoft's partner Hamsa will continue to test and support ZKP Nova. Central Bank Executive Secretary Rogerio Lucca recently pointed out that the team behind Drex is still studying the future of the project. He said, 'Based on the ongoing test results, the technical team is currently discussing possible future steps for the project.' However, he did not disclose the test results.