Mercado Bitcoin Exchange and Stellar Join the Brazilian CBDC Push

Key Insights:

• Mercado Bitcoin and Stellar have partnered to develop a minimum viable product for a Brazilian CBDC.
• Stellar will work with Mercado Bitcoin, CPQD, and ClearSale as a part of the LIFT Challenge consortium.
• The partnership is backed by the Central Bank of Brazil and the National Federation of Associations of Central Bank Servers.

Mercado Bitcoin — one of the largest crypto brokerage firms in Latin America – that hit the news wires recently over Coinbase reportedly acquiring its parent company 2TM, is again on the news. But this time, the crypto exchange giant is exploring use cases of a Brazilian central bank digital currency (CBDC).

Mercado Bitcoin and stellar join hands to work on a CBDC

Mercado Bitcoin and the Stellar Development Foundation (SDF) have partnered in a move to develop a minimum viable product for Digital Real, which is set to pilot in 2022.

Brazil has been picking up pace in the crypto marathon by introducing various ‘pro-crypto’ measures. For instance, the country’s central bank has partnered with nine projects to complete its CBDC goals. Some partners include DeFi lending platform Aave, Visa of Brazil, ConsenSys, Microsoft, and banks like Santander Brasil and Itaú Unibanco.

The latest collaboration between Mercado Bitcoin and SDF would join the nine projects in the LIFT Challenge Real Digital.

With the announcement, SDF would work with ClearSale and CPQD, together with Mercado Bitcoin, as part of the LIFT Challenge consortium. The LIFT Challenge is a collaborative environment hosted by the Central Bank of Brazil (Bacen) and the National Federation of Associations of Central Bank Servers.

Mercado Bitcoin CEO Reinaldo Rabelo commented that the consortium of companies is working to build a robust solution for the financial market. He added,

“Utilizing the Stellar network will allow us to deliver a complete case for evaluation by the Central Bank.”

This is because Stellar has already had experience developing a CBDC with war-torn Ukraine. Due to the ongoing conflicts between Russia and Ukraine, there has been a lack of updates on the CBDC project.

Denelle Dixon, CEO of the Stellar Development Foundation, said in a press release that similar to the Ukrainian CBDC, the Digital Real would advance the innovation of payments and make the country’s financial system more inclusive.

“Stellar’s network is prepared to support Mercado Bitcoin and the Central Bank of Brazil as they explore use cases for the Real Digital’s future. Stellar was designed for asset issuance, and its built-in compliance tools give Mercado Bitcoin a strong foundation to develop a solution with the features that Bacen expects to see.”  

Close to a Digital Real launch?

According to Roberto Campos Neto, the President of Banco Central do Brasil (BCB), Brazil will start piloting its CBDC in the second half of 2022. However, earlier reports said that the asset will not be ready for use until 2024.

Neto said that the sovereign national digital currency would have a fixed supply like bitcoin (BTC) and would be pegged to the national currency – the Brazilian real (BRL).

Additionally, the city of Rio De Janeiro has also been at the forefront of crypto adoption by introducing the payment of taxes in cryptocurrency.

The collaboration of several firms with newcomers Mercado Bitcoin and Stellar aims to identify the technological feasibility, use cases, and infrastructure needed to launch the Real Digital. The initiative would also attract market participants, banks, payment institutions, tech companies, and others.