The Central Bank of Brazil selects Itaú’s DeFi proposal among new innovative projects

The largest bank in Brazil, Itaú Unibanco, submitted a proposal for decentralized finance (DeFi) liquidity pool that the central bank of the country chose to advance via its innovation lab.

According to a Central Bank release in Portuguese, the proposed project will be a “platform that, through blockchain and smart contracts, allows custody, currency exchange, and alternative investments.”

“The use case consists of creating a liquidity pool, with tokens that emulate stablecoins that can have parity with the [Brazilian] real, dollar or some other fiat currency, with its operation being similar to that of liquidity DeFis that operate in the digital asset market,” it continued.

Blockchain-powered projects aiming to change the financial system of Brazil

Several further blockchain-related initiatives are also included in the list of proposals. One suggestion from Lovecrypto entails transforming a stablecoin on the Celo blockchain into the Real Digital, which would serve as Brazil CBDC. While a different proposal from Celso Jungbluth focuses on decentralized microcredit, another project from Delend Tecnologia would create a decentralized credit system focused on small- and medium-sized firms.

Developers must provide a working prototype and report for each project by December 15 after the lab opens on September 12.

According to S&P Global, Itaú is the biggest bank in Brazil, with more than $371 billion in total assets. In order to improve PIX, the nation’s rapid payment system, the Central Bank also selected another Itaú project that focuses on near-field communication (NFC) and QR code technologies.

Since the LIFT Lab’s founding in 2018, this is the fifth round of projects that have been chosen. In March, LIFT independently decided to create nine projects with the goal of creating a Brazilian CBDC.

Brazil, which was once rumored of adopting Bitcoin as its legal tender, already had plans to bring its “Bitcoin law” by July this year, as TheCoinRise reported, which means investors should be ready for a massive change in its regulatory structure in the future.

Notably, in October 2021, Brazilian regulators hinted at their plans to impose stricter penalties on crimes involving cryptocurrencies.