Banco Central’s sandbox moves to the project development phase.

The Central Bank selected the seven projects for Cycle 1 of its regulatory sandbox. The list of companies that own the projects includes Itaucard, JP Morgan, Mercado Pago and Himov. Initially, the institution had said that it would choose from 10 to 15 projects. The next phase is development and is expected to take a year.

JP Morgan’s project includes the use of their JPM Coin encrypted currency. Each one is worth a dollar. But the bank says this is not a stablecoin, but a bank’s blockchain deposit. The bank is participating in projects using its currency and central bank digital currency (CBDC). In addition, he stated, in BC’s last webinar on the digital real, that he would expand the use of Coin to other regions.

Applications for the sandbox started in February. However, the initial forecast was for the analysis to end in June and testing to begin in July. The disclosure of the result lasted, therefore, longer than expected. On the occasion, the BC said that it would prioritize projects related to foreign exchange, sustainable finance, financial inclusion. In addition, he was interested in credit for micro-entrepreneurs, open banking, Pix and rural credit.

The last sandbox of the Brazilian Securities and Exchange Commission (CVM) also had a few selected. That’s because there were 3 out of 33 projects presented. Of these, two are tokenization.

Central Bank sandbox projects include Foreign Exchange, Pix and Credit

According to a press release, the projects that are in the sandbox are:

  • Technological solution for the execution of multi-currency payment instructions, for exclusive use between institutions authorized by the BC to operate in the foreign exchange market for the purpose of immediate exchange of JP Morgan reserves.
  • Carrying out payment transactions with credit concession, revolving or in installments, using Pix functionalities, from Itaucard.
  • Platform for issuance and secondary trading of private fixed income securities, on the OTC Exchange.
  • Development of a secondary market for Inco Bank Credit Bills (CCBs), an investment platform in the real estate market with a return on fixed income.
  • Implementation of a network of physical points that offer the service of contribution of resources in kind, from Mercado Pago.
  • Platform to move amounts between two or more accounts, with the transfer of amounts to ‘temporary or settlement’ accounts, on demand, to carry out an operation under previously signed conditions, from (IUPI)
  • Loan with property guarantee, with payment on maturity and without periodic amortizations, combined with the contracting of specific insurance to reduce relevant risks, from Himov.

Regulator can change rule if results are positive

Now, the companies that BC selected will be able to develop their projects in an environment controlled by the regulator. The expected duration of this phase is one year, but it may be extended. Supervision is by the Strategic Management Committee of Sandbox BC (Cesb).

If the results of a project are positive, the BC may make adjustments to the regulation. Therefore, it will “allow these products and services to be provided, on a permanent basis, in the National Financial System and in the Brazilian Payment System”.

JPMorgan to extend usage of its cryptocurrency

In BC’s latest webinar on the digital real, Naveen Mallela, global head of Onyx, the digital asset arm that JP Morgan Chase created in 2020, said that “our view of the world is that CBDCs and commercial digital currencies (such as JPM Coin) will coexist.”

JP created, for example, a platform with the DBS, from Singapore, andm that it’s JP who provides liquidity in dollars in international transactions. DBS, on the other hand, is in its own currency. And so it will be with other institutions that participate.

According to Mallela, the bank has had a lot of demand from customers, especially e-commerces, who need currency quickly. However, he admitted that JP’s view of digital currencies “is very commercial”.

Source