According to a new report, the Brazilian Central Bank Digital Currency (CBDC) is said to be built with a function that allows the administration to freeze user cash and modify balances. The information became public after Pedro Magalhaes, a well-known blockchain developer and the creator of Iora Labs, was able to decode the CBDC’s technological underpinnings.
The Application Programming Interface (API), which is accessible on the monetary authority’s Github account, was examined by Magalhaes. His revelation revealed a potentially contentious control tool for the Brazilian government, but there has been an unsettling lack of response from authorities.
Brazilian journalist and cryptocurrency expert Vini Barbosa confirmed the information on social media. He verified Magalhaes’ judgment as a reporter for the crypto-focused news source Portal Do Bitcoin by claiming that he had had direct contact with the Brazilian government.
Barbosa clarified on Twitter, saying that according to the Central Bank’s statement, the authority to “freeze or arrest amounts” within the system is consistent with current Brazilian law.
Magalhaes at first thought that the freeze capability would be restricted to DeFi or CeFi activities, where a balance freeze could be necessary to carry out a smart contract activity. Magalhaes revealed the issue on LinkedIn for educational purposes. He was told, nevertheless, that the central bank had the authority to use this capability as and when it was judged essential.
This is very scary giving the government the ability to just take your money, or freeze it whenever they please.
Brazilians are worried about this because of their nation’s turbulent financial history. Their worries are not unfounded, as the Brazilian president once imposed an 18-month financial freeze on all Brazilians in the 1990s.
Magalhaes supports more openness and education of the general people as a means of limiting the central bank’s enormous control over the CBDC.
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