Central Bank of Brazil Director Calls Bitcoin a Financial Innovation

Key Takeaways:

  • Araujo states Bitcoin is the catalyst for what is today known as Web3.
  • Brazil is looking to launch CBDC called the digital real soon.
  • “The CBDC is an expression of the Real within the environment in which cryptocurrencies operate,” says Araujo.

Fabio Araujo, the Director of the Central Bank of Brazil, states Bitcoin is the catalyst for what is today known as Web3. He was speaking at an event organized by a business school. Araujo further elaborated on his belief in the potential of Bitcoin. Praising the properties of Bitcoin, he states it is a financial innovation using new technologies.

“We started to accelerate this in 2009, with the launch of Bitcoin, with distributed database technology that facilitates the creation of Web3”, said the Central Bank of Brazil Director. He further added that the Bitcoin application brings the Proof of Work solution, which he claims is “a fundamental thing for the services that Web3 brings to the population”.

 Araujo also added that BTC tech preceded Ethereum, which includes smart contracts that add more possibilities to the financial system. The latest comments come amid the country’s Central Bank working towards issuing Central bank Issued Digital Currency(CBDC)-the digital real soon. According to recent reports, the digital real pilot test that was supposed to commence later this year has been pushed to 2023 owing to a worker’s strike.

Talking about the status of the implementation of Digital real, the Central Bank Director states that his organization hopes to add programmable features and smart functions to the currency. Furthermore, commenting on CBDC’s potential, he said that the digital real presents an opportunity for bringing smart functions to bridge the existing gap between traditional finance and Web3 protocols.

In the event presentation, the central bank’s digital currency is shown as being linked to Web3 elements, such as digital assets, internet of things protocols, and offline payments. While differentiating between cryptocurrency and digital real/CBDC, Araujo said,” Even though CBDC uses the tech that supports crypto, CBDC is, however, not a crypto asset. The CBDC is an expression of the Real within the environment in which cryptocurrencies operate, in the same way, that the Real does not compete with listed assets“.

Brazil is also planning to put cryptocurrency assets and virtual asset service providers under a regulatory framework soon. According to local media reports, the cryptocurrency bill, identified with the number 4.401/2021, is set to be addressed this week.

The crypto-centric bill seeks to regulate cryptocurrency exchanges by creating a single regulator. Further, the bill plans to legalize cryptocurrency mining and establishes tax exemption rules for mining institutions that use 100% renewable energy to develop mining farms. In June, Brazil’s Congressman also proposed addition to an existing Brazilian law that would grant citizens the right to use cryptocurrency as a means of payment.

 

Saniya Raahath
Saniya Raahath

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