On the same day, developer and founder of tech consulting firm Iora Labs, Pedro Magalhães, announced that he was able to reverse engineer the open source CBDC. The code does not address the specific circumstances under which CBDCs could be frozen, nor is it clear who would be able to wield such broad powers.
“It’s one thing to agree to a transaction and execute through a DeFi project where different blockchains are involved. These aspects should always be disclosed in smart contracts. First of all, such a thing should be discussed with the citizens of the country, and this has not been done,” the developer reasoned.
Pedro Magalhães suggested that Brazil’s Central Bank may retain these features for secured loans and other financial transactions where decentralized finance protocols are involved. With government steblecoins, it could be easier to track taxes and verify exactly what the budget is allocated for.
In May, the Bank of Brazil invited financial institutions to test their own digital currency, and in June it formed a special consortium to do so, with Mercado Bitcoin and MasterCard as members.