The Central Bank of Brazil has begun testing its Central Bank Digital Currency (CBDC) project, which is expected to promote greater inclusion of individuals in the financial sector.
Also, the government of Thailand is willing to offer tax breaks to companies that issue digital tokens for investment purposes.
Brazil starts CBDC pilot
According to Reuters on Monday (March 6, 2023), the coordinator of the CBDC project at Brazil’s central bank, Fabio Araujo, said widespread use of digital reality is expected to occur in 2024 after the completion of the pilot. Part of the testing phase involves individuals buying and selling federal bonds and subsequent evaluation.
The report also said Brazil’s CBDC will be a blockchain-based payment that supports retail transactions. This payment is covered by the client’s deposits into their bank accounts. This way, banks will not be disintermediated as they will exist within the CBDC matrix. As such, they do not lose their source of credit.
A statement from Araujo said:
“This environment reduces costs and offers people the opportunity for financial inclusion. You have services that are very expensive to run, like repo operations, which are only for banks today, but can be done by anyone with a technology based on digital currency.
The director of the central bank added:
“This could lower the cost of credit, the cost of improving return on investment. There is great potential for new service providers, fintechs, democratizing market access and offering new services.”
Araujo said the proposed CBDC initiative is not intended to interact with digital payment rails, as Brazil’s existing payment system Pix already fulfills the purpose.
In addition to Brazil, other countries are conducting CBDC pilots. As previously reported by CryptoPotatoJapan’s top bank wants to start experimenting with its CBDC project in April 2023. India’s retail digital rupee pilot project, which launched in December 2022, has 50,000 users and 5,000 merchants on board.
However, in the United States, Representative Tom Emmer recently introduced a bill to stop the issuance of a digital dollar.
Thailand’s Crypto Tax Benefit
In other news, Thailand waives corporate and value-added tax (VAT) for companies issuing digital tokens. According to a Reuters report, investments in digital tokens will serve as an alternative means of raising capital for companies to existing traditional methods such as bonds.
A government spokesman, Rachada Dhnadirek, said the tax breaks could cost the Thai government 35 million baht ($1 billion) while stating that the country could see 128 billion baht ($3.71 billion) in investment over the next two years .
The latest development comes as Thailand has been applying strict regulatory oversight in the crypto industry lately. In September 2022, the country’s Securities and Exchange Commission (SEC) banned crypto companies operating in Thailand from offering cryptocurrency staking and lending. Earlier in the same month, the Thai SEC launched strict regulations on crypto advertising.
Following the collapse of former crypto exchange giant FTX, Thailand’s regulatory watchdog said it would introduce stricter crypto regulations to protect investors.
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