Ethereum’s blockchain allows developers to create new tokens, decentralized applications, and more with smart contracts. Perhaps that is the reason that the state-owned Brazilian National Social Development Bank has chosen it to launch a new pilot for their BNDES token.
The BNDES token is designed to be a stablecoin, supported at a 1:1 exchange for the Brazilian real. Though the launch of the pilot comes in January, the bank has already been developing and testing out the stablecoin this year. The plan is to use it as a method of covering tax-deductible contributions involving cultural institutions.
The bank will be consulted by several companies in the process, like ConsenSys. So far, many of the companies involved with the bank’s project wouldn’t comment further than their attachment to it, everything appears to fall in like with the priorities that founder Joe Lubin has expressed. Lubin noted that the focus for ConsenSys will be centered on being an advisory source for the Brazilian bank, supporting them with their knowledge in architecture and token design.
During the pilot, the National Film Agency (also referred to as Ancine) will be the recipient of several hundred dollars’ worth of BNDES. This allotment is meant to be used towards the promotion and creation of movie productions within Brazil’s borders. The goal is that this pilot will help to bring faith back to the bank, considering a history of corruption involving bribes and misallocated funds. With the blockchain details that leave their interactions transparent, state-owned banks will hopefully place more trust in it again.
The National Registry of Taxpayers’ (Cadastro Nacional da Pessoa Jurídica, or CNPJ) electronic identification certificates are part of the trial as well. Locally, these certificates are used as official registration amongst local companies. A development manager for the BNDES systems, Vanessa Almeida, said,
“We can enforce rules using smart contracts. The company that receives the money can only spend it with companies that are working within the [film] sector.”
As far as the CPNJ identifiers, Almeida also noted,
“We have a kind of ID in Brazil that has a certificate to send a token to the company, the company has to sign with this certificate…we will know in advance to which address you can send the tokens.”
The only way for the stablecoin to be redeemed is presently through a bank, which means it will only be exchanged for the local currency. However, the main reason for Ancine to use it is as a way to show financial records in real time, which is made possible with the help of Ethereum Foundation developer Alex Van De Sande. Ultimately, Almeida believes that the details gathered “can help guide public policies.”
The main users for stablecoin have been crypto traders, opting to store them for their value to avoid the need to deal with banks in the first place. However, this pilot suggests that there’s a way for the fiat-pegged cryptocurrencies to be used in a way that dances outside of the speculative markets.
Rosine Kadamani, for example, believes that the pilot could cause other events to occur in the country, since the bank hosting it is known for managing funding for multiple projects in the country. Kadamani, who happens to be the founder of the Blockchain Academy locally, noted,
“Because unfortunately, Brazil is very well-known for corruption, there’s a lot of questioning about the use of public funds. They start with a stablecoin that is basically an accounting control, because everything goes back to the bank. But in the future, if it works well, there are other implications.”