Brazil Launches CBDC Pilot with 50K Merchants for Real-Time Tax Tracking
The Brazil launches CBDC pilot with 50K merchants for real-time tax tracking marks a major step forward in digital payments and fiscal innovation. Brazil launches CBDC pilot with 50K merchants for real-time tax tracking through its Drex project—an ambitious leap beyond traditional payment systems. Brazil launches CBDC pilot with 50K merchants for real-time tax tracking, aiming to streamline tax compliance for merchants. Brazil launches CBDC pilot with 50K merchants for real-time tax tracking as it equips traditional retailers with cutting-edge tax monitoring tools via CBDC. The fact that Brazil launches CBDC pilot with 50K merchants for real-time tax tracking showcases its commitment to modernizing payments and boosting tax transparency.
This initiative introduces Drex, Brazil’s digital real pilot. It bridges everyday commerce and government oversight. With 50,000 merchants on board, this is one of the largest CBDC trials globally. Merchants can receive and transmit payments instantly. And every payment is recorded in real time. Tax authorities gain immediate visibility into transactions as they happen. That enables more accurate, automated tax collection. Merchants enjoy instant reconciliation—and fewer accounting headaches.
In short, this marks a turning point in Brazil’s financial evolution and global CBDC experimentation. The digital real pilot builds trust, transparency, and efficiency for both merchants and regulators. Let’s explore how Drex works, why merchants joined, and what this means for Brazil’s economic landscape.
What is Drex? A Digital Real Explained
The Brazil launches CBDC pilot with 50K merchants for real-time tax tracking introduces Drex, the Digital Real, Brazil’s central bank digital currency (CBDC). Drex serves as a tokenized version of the Brazilian real. The design focuses on retail and wholesale applications. The Brazil launches CBDC pilot with 50K merchants for real-time tax tracking highlights that Drex is backed by the central bank, not private entities, maintaining the same value as physical reais. The Brazil launches CBDC pilot with 50K merchants for real-time tax tracking process reflects a deliberate effort to evolve Brazil’s financial system.
Dual Structure: Retail and Wholesale
Drex operates in two tracks. Wholesale Drex (wDrex) manages interbank settlements. Retail Drex (rDrex) enables consumer-level transactions. This architecture preserves current banking roles while tapping the power of tokenized payment rails.
Built on Distributed Ledger Technology
Drex runs on a permissioned blockchain, using Hyperledger Besu nodes controlled by the Central Bank. It integrates with Brazil’s existing Pix instant payment network and open banking system.
Core Features
Programmable smart contracts for payments and asset transfers
Tokenization of government bonds, real estate, and consumer credit
Built-in privacy safeguards to adhere to LGPD data protection laws
Drex’s launch builds on the success of Pix. It aims to reduce costs, broaden access, and enhance security. With Brazil launches CBDC pilot with 50K merchants for real-time tax tracking, Drex now enters a real-world trial. That makes this project one of the largest CBDC tests globally.
The Pilot: 50K Merchants Involved
Brazil launches CBDC pilot with 50K merchants for real-time tax tracking by enrolling 50,000 merchants in a sweeping Drex program. The Central Bank handpicked participants through banks, fintechs, and payment firms, tapping into various retail sectors.
Who’s Involved
The pilot engages a diverse merchant base—from small retailers to medium-sized businesses. Each merchant links a Drex-compatible digital wallet to their bank account. Wallet limits range from $8,000 to $1,000,000, supporting unlimited annual transactions.
Selection and Onboarding
Merchants were selected based on readiness, technical capacity, and compliance with tax/reporting rules. Institutions applied through the Central Bank’s sandbox initiative. After vetting, merchants joined via intermediary platforms like PSPs and acquirers.
Integration with Pix
The pilot builds on Brazil’s Pix system. Drex transactions occur alongside Pix, offering familiar interfaces. Merchants can accept digital real payments instantly, just as they would with Pix. Integration remains seamless.
This flagship phase probes technical, operational, and regulatory readiness. Brazil launches CBDC pilot with 50K merchants for real-time tax tracking to assess real-world performance across sectors.
Real-Time Tax Tracking: How It Works
Brazil launches CBDC pilot with 50K merchants for real-time tax tracking by integrating Drex payments directly with tax authorities’ systems. Every transaction is captured and processed immediately on a distributed ledger. A smart contract automates tax calculation and remittance.
Instant Data Capture
When a customer pays with Drex, the system logs merchant ID, transaction value, timestamp, and tax classification. These details are sent instantly to tax authorities. That removes reporting delays and manual reconciliation.
Smart Contracts in Action
Drex supports programmable money. Tax rules are embedded in smart contracts. When a payment occurs, the contract calculates and detaches the tax share. That sum is sent to the treasury automatically. The merchant receives the net amount instantly.
Compliance by Design
Real-time tax tracking means merchants no longer need monthly filings. Tax data flows live from wallet to tax authority. This reduces error and boosts compliance efficiency.
Built on DLT
Drex uses Hyperledger Besu, a permissioned blockchain. It links Pax-based payments with Drex tax flows seamlessly. Blockchain ensures tamper-resistant records, traceable auditing, and real transparency.
Benefits for Merchants
Brazil launches CBDC pilot with 50K merchants for real-time tax tracking delivers practical advantages. Merchants gain streamlined operations, cost savings, and faster payments—all while embracing digital evolution.
Lower Transaction Costs
Drex reduces intermediaries in payment flows. Payments go peer-to-peer, cutting fees charged by banks or processors. The Central Bank designed Drex to lower operational expenses and simplify merchant billing.
Instant Settlements
Real-time settlement arrives directly in merchant wallets. No waiting for clearance reduces cash-flow gaps. Revenue becomes immediately usable.
Built-in Compliance
Tax withholding and reporting occur automatically via smart contracts during transactions. That removes manual filings entirely. This compliance by design reduces both error and effort.
Enhanced Security & Transparency
Distributed ledger technology creates tamper-proof records. Merchants access clear, auditable transaction histories. That boosts trust with tax agencies and partners.
Improved Cash Flow & Liquidity
Faster settlements and integrated tax deductions free up working capital. Retailers no longer wait days for funds, nor juggle tax liability.
Business Innovation & Programmability
Merchants can integrate prepaid vouchers, loyalty points, and automated refunds. Programmable money allows richer, tailored customer experiences.
Implications for the Tax Authorities
When Brazil launches CBDC pilot with 50K merchants for real-time tax tracking, tax authorities gain unprecedented oversight. Real-time tax tracking reshapes fiscal administration. Authorities can analyze receipt flows as transactions occur. This enables swift detection of evasion or anomalies. Data arrives continuously, empowering live audits and policy adjustments.
Brazilian tax agencies will no longer rely on delayed monthly filings. They’ll receive live streams from Drex wallets. This cuts bureaucratic lag and boosts compliance effectiveness. It also frees resources spent on chasing late returns.
The pilot integrates tax code into smart contracts. Tax share splits off during transactions and routes to authorities instantly. This shift moves remittance from manual to automated, reducing human error and fraud.
Backed by Hyperledger Besu, blockchain guarantees traceability and unalterable records. Every tax-related event is timestamped, transparent, and auditable. This strengthens trust in tax data reliability and reduces disputes.
Fiscal planning gets a boost. Authorities can model economic activity almost in real time. No longer bound by outdated tax returns, they can forecast revenue and adjust policy faster. This agility supports dynamic budgeting during volatile periods.
Brazil’s move reflects global trends. CBDCs and fast payment systems support tax automation. International bodies like BIS and IMF have identified fiscal automation as a key benefit.
Privacy & Data Governance: Merchant Concerns
Brazil launches CBDC pilot with 50K merchants for real-time tax tracking, but privacy remains a top concern. The Central Bank respected LGPD (Brazil’s data protection law) while designing Drex, balancing transparency and privacy.
Privacy Challenges and Delays
The first pilot phase prioritized issuing and redeeming Drex tokens. However, the next phase faced delays due to unresolved privacy issues. The bank tested four privacy methods but found none mature enough, which postponed expansion until late 2024.
Privacy Solutions Explored
They examined confidential computing, centralized data restrictions, zero-knowledge proofs like Anonymous Zether and Starlight, and interoperable network tools like Rayls. None fully met privacy standards.
Rayls and Ongoing Trials
Rayls, a privacy-enhancing layer, passed tests in collaboration with 16 banks by September 2024. It offers selective data visibility and atomic settlement. The Central Bank continues to explore ZKP Nova and other new technologies.
Data Governance Measures
Drex uses permissioned blockchain on Hyperledger Besu. Only central bank-authorized nodes participate. It enforces encryption, granular access, data minimization, and multi-factor authentication.
Merchant Implications
Merchants will benefit from audit-ready, secure records, but worry about data exposure. They need reassurance that personal and sensitive business information stays confidential. The LGPD framework supports these protections.
This section underscores the crucial balance Brazil strikes in the pilot: Brazil launches CBDC pilot with 50K merchants for real-time tax tracking while preserving privacy through layered protection, ongoing audits, and advanced cryptography.
Technical Infrastructure & Intermediaries
Brazil launches CBDC pilot with 50K merchants for real-time tax tracking on a robust, multi-layered backend. The setup blends central oversight with modern fintech infrastructure.
Blockchain Core: Hyperledger Besu
The Central Bank chose Hyperledger Besu as the blockchain engine for Drex. It is a permissioned, EVM-compatible network ideal for secure, private CBDC environments. Besu supports Java-based client software, private transactions, access control, and is scalable for future phases.
Pix Integration
Drex integrates seamlessly with Pix, Brazil’s instant payment infrastructure. Pix handles billions of transactions monthly, providing a proven, resilient backbone. Merchants use the same interfaces, easing adoption and friction.
Fintechs, Banks, and PSPs
Participation funnels through payment service providers, fintechs, and banks. Phase two involves major players: Banco Inter, Bradesco, Itaú, Santander, Nubank, Visa, and Mastercard. These intermediaries operate Drex-compatible wallets, handle KYC/AML, and connect merchants to the Central Bank network.
Oracles & Cross-Chain Connectivity
Phase two includes trade-finance use cases with Microsoft, Chainlink, and 7Comm. Chainlink’s CCIP enables cross-chain interoperability and automated payments tied to supply chain events. Microsoft provides cloud infrastructure support.
Sandbox Environment
BBChain offers a sandbox running Hyperledger Besu where institutions simulate Drex workflows, custody, and tokenized asset issuance. This enables iterative testing before public rollout.
Programmable Architecture
Drex supports smart contracts for transactions, payment triggers, and tax deductions. It embeds programmability in compliance and trade finance automation.
Use Cases & Merchant Experiences
Brazil launches CBDC pilot with 50K merchants for real-time tax tracking while testing diverse, real-world use cases. Merchants and institutions gain hands-on insights through pilot phase two.
Streamlined Vehicle Sales
BV Bank tested a delivery-versus-payment model tied to car purchases. Drex connects title transfer with instant payment. Funds release only when ownership shifts. This eliminates settlement risk for buyers and sellers. Merchants can integrate loan processing and title systems, streamlining finance to settlement workflows.
Tokenized Real Estate & Receivables
Pilot phase two includes tokenized real estate deals and receivables assignments. Smart contracts automate asset ownership and payment transfers. Merchants can sell fractions of properties or manage receivables flexibly.
Trade Finance & Supply Chain
Drex enables automated trade finance via Chainlink oracles and Microsoft cloud. Electronic bills of lading trigger payments automatically when goods move. Banco Inter sees this as a way to reduce inefficiencies and speed up cross-border transactions. Reddit users noted Drex facilitates delivery-versus-payment and payment-versus-payment in global chains.
Programmable Liquidity Pools
Phase two explores liquidity pools for public bonds, collateralized debt, carbon credits, and debentures. Drex supports fully programmable money, enabling in-ledger asset changes, credit, and automated settlement.
Early Merchant Feedback
While structured testimonials are limited, BV Bank reports strong performance in simulated settlements, improved operational agility, and reduced manual complexity. The Central Bank invites feedback through its sandbox, indicating active merchant engagement and iterative improvement.
Challenges & Risks
When Brazil launches CBDC pilot with 50K merchants for real-time tax tracking, it confronts several key challenges that could hinder adoption and impact success.
Privacy Trilemma
Drex must juggle privacy, programmability, and oversight. Early privacy tests like Rayls and Anonymous Zether struggled to balance anonymity with regulatory visibility. The Central Bank admitted none met legal standards, delaying broader rollout. Tools like confidential computing or zero-knowledge proofs enhanced privacy but complicated oversight. That slowed launch and expansion.
Scalability & Tech Complexity
Phase one revealed performance limits. Current tech cannot handle millions of transactions per day while maintaining privacy. Integration with banks’ legacy systems required custom engineering—built from scratch each time. As a result, the pilot narrowed scope, capping use cases and participants.
Centralization & Cyber Risks
Drex runs on a closed, central-bank-controlled network. That streamlines oversight but concentrates vulnerability in a single point. The Central Bank acknowledges risk of cyberattack and state control over balances.
Digital Divide & Merchant Readiness
Rural merchants and low-income groups may lack digital access or skills. Many Brazilians still lack reliable internet. This raises concerns about exclusion from Drex’s benefits. Financial literacy and technological capacity remain uneven.
Public Trust & Perception
Privacy fears run deep. Reports warn Drex could be a surveillance tool, enabling instant tracing or account freezes. Polls show skepticism; trust is far from assured. Adoption may lag if the public resists.
Future Roadmap
Brazil launches CBDC pilot with 50K merchants for real-time tax tracking while shaping the path for Drex’s full deployment.
Phase 2: Governance, Privacy, Interoperability
The Central Bank began phase two in late 2024. It focused on governance, privacy compliance, and interoperability. Thirteen themes were selected—spanning tokens, trade finance, credit collateral, FX, real estate, carbon assets, and auto settlements. Major banks and tech partners joined this phase.
Phase 3: Tokenization & Consumer Credit Testing
In June 2025, officials confirmed phase three will test tokenization, consumer credit, and transaction efficiency. Tests will refine programmability, settlement speed, and privacy across asset types.
Timeline to Public Launch
Initial plans aimed for a public rollout by the end of 2024, but delays pushed it to early 2025. Phase three should complete by late 2025, followed by a controlled public release in early 2026.
Integration with Pix
Pix will receive upgrades, including an installment feature in September 2025 and loan-collateralized receivables in 2026. These enhancements will expand Drex’s ecosystem.
International & Cross-Chain Expansion
Drex will test cross-chain interoperability with Chainlink’s CCIP and Microsoft cloud. Plans include linking with public blockchains, DeFi apps, and cross-border settlements via multi-CBDC networks.
Ongoing Privacy & Tech Refinement
Privacy remains the top technical bottleneck. The Central Bank continues testing confidential computing tools like Rayls, zero-knowledge protocols, and advanced governance code. Resolution is expected before scaling.
