Brazil Should Adopt the Stable Coin in Place of its CBDC Drex, According to Experts
Legal experts believe that the introduction of a stable currency is more efficient than the Drex. Centralization and government control is one of the problems of the Brazilian CBDC. The national stablecoin with parity to the real would be a better option.
Drex’s privacy is questioned by Cryptoasset lawyers. They argue that Brazil should prioritize introducing stable currencies tied to the real instead of the CBDC.
Experts have expressed concerns to BeInCrypto about the centralization and excessive control of the state. Although Drex is presented as an innovative step in the modernization of the financial system, legal experts point out that its implementation could be a threat to the privacy and financial autonomy of the population.
Brazil: Centralization and the Central Bank
The possible centralization of Drex would allow the Central Bank to monitor and even restrict transactions, according to Pedro Torres, partner at Sydow e Torres Advogados Associados. This raises concerns about users’ financial freedom and privacy:
“The Central Bank itself has already confirmed that the “Real Digital” will have functions that will allow freezing the amounts held by users of the digital version of the Brazilian currency, apparently following the legal prerogatives it already has when there are legal proceedings,” he said.
Torres, who holds a master’s degree in blockchain and digital currencies, argues that the concept violates the ideological foundation of decentralization, for example, bitcoin:
“Critics of Drex argue that its implementation will centralize financial control in the hands of the state, thereby compromising the privacy and freedom that decentralized cryptocurrencies, particularly bitcoin, seek to promote: While bitcoin emerged as a response to the centralized nature of the traditional financial system, seeking to provide a decentralized alternative and resistant to government control or any central authority, the CBDC is designed to be centralized, providing a way for the central bank or government of the day to monitor and control the financial transactions of individuals in a given economic system,” he added.
National Stablecoin Would Offer Practicality Without Government Control
Conversely, without the centralization of government control, the creation of a national stablecoin tied to the real could offer the same security and efficiency benefits as Drex. This is what Spencer Sydow believes. Sydow holds a doctorate in law from the University of São Paulo. He points out that such a model could also be developed more quickly and with less regulatory impact:
“The Brazilian model, which raises questions about the government’s ability to maintain a high level of oversight and management of digital currency, contrasts, for example, with the approach of the United Arab Emirates, a country known for its developed crypto ecosystem and for being a pioneer in several policies related to digital assets, which opted to develop a private stable currency linked to the dirham (AED),” explains the lawyer, partner at Sydow e Torres Advogados Associados.
The need to modernize the monetary system is not at the center of the discussion for the expert. The debate is about innovation in a way that preserves citizens’ autonomy and freedom:
“Stablecoins are not designed to operate outside the state and regulation, but to offer greater flexibility and autonomy to the user, who has the option to use them or not. Every transaction would be publicly recorded on the blockchain, preserving the relative anonymity of the user, as is currently the case with the bitcoin and Ethereum blockchains,” he added.
By Leonardo Pérez