Brazil’s Securities and Exchange Commission (CVM) has announced that the country’s central bank digital currency (DREX) will contribute to the disappearance of cryptocurrencies in the local market, with the exception of Bitcoin.

The head of the commission, João Pedro Nascimento, is confident that the introduction of a state stablecoin will negatively affect the adoption of little-known cryptocurrencies. DREX should expand people’s access to financial services, diverting attention from cryptocurrency projects, combining their useful functions and advantages into their own digital currency. The Central Bank’s digital currency will use smart contracts, and this will increase the speed and efficiency of transactions, CVM expects. Thanks to the security of DREX, cryptocurrencies will no longer be attractive to Brazilians, Nascimento is sure.

“I’m not talking about Bitcoin, which is the leading crypto asset by market capitalization. As an exception, he will continue to be popular among Brazilians,” the CVM president said.

While many regulators take a hard line on cryptocurrencies, CVM prefers to take a more flexible approach. The official emphasized: technological innovations need to be regulated, but this should be done in such a way as not to suppress, but to develop innovations. The lack of regulation of cryptocurrencies creates a shadow market in which participants can freely launder money and evade taxes.

“Every time people have tried to stop innovation, they have failed. We must see opportunities in innovation and try to bring them to market,” Nascimento said.

Let us remind you that in 2024, CVM plans to launch a new “regulatory sandbox”, where it will study various scenarios for asset tokenization.