Drex in the Context of the Genius Act and Sanctions: Model Weaknesses and the Deviation from Open Tokenization

The enactment of the Genius Act in July 2025, which regulates stablecoins and deposit tokens in the US, and threats of sanctions from the Trump administration against Brazil, expose critical vulnerabilities in Drex, the Central Bank of Brazil's (BCB) wholesale CBDC planned for 2026. Operating on the permissioned Hyperledger Besu blockchain, Drex utilizes deposit tokens — digital assets issued by financial institutions representing deposit liabilities — for interbank settlements and tokenization of strategic Brazilian assets.

The Genius Act is not merely domestic American legislation: it is the legal infrastructure that will consolidate global digital dollar dominance. With $180 billion in stablecoin liquidity (2025) and accelerated adoption by global fintechs, the US creates a parallel financial ecosystem that marginalizes isolated CBDCs. Meanwhile, Brazil concentrates scarce resources on a solution that, by design, cannot compete globally.

With 15 years of experience in financial systems, including direct participation in the construction of PIX and phases 1 and 2 of Drex, I recognize the technical value of the project. However, I question: is the obsessive focus on Drex creating a technological bubble that isolates Brazil from the global programmable money revolution?

Why is the transformative potential of tokenization monopolized by a state infrastructure that, by nature, cannot match the speed of private innovation?

This article offers an impartial technical analysis of the structural weaknesses of the current model, free from corporate bias that silences critical debates due to established commercial interests.        

Genius Act: Consolidating Digital Dollar Hegemony

The Genius Act represents much more than domestic regulation: it is the American strategy to export monetary supremacy through stablecoins. By legitimizing USDC, USDT, and deposit tokens like JPMorgan Coin, the US creates global digital dollar infrastructure operating 24/7, without traditional intermediaries, with instant settlement.

Data revealing the magnitude of the problem:

• Stablecoin volume: $180 billion in circulation, 40% growth in 2024
• Transaction velocity: 280 million transactions/month vs. zero for Drex
• Enterprise adoption: PayPal, Visa, Stripe integrate stablecoins natively
• DeFi liquidity: $45 billion in Total Value Locked using stablecoins

While Brazil debates Drex governance, global companies are already migrating to digital dollar rails. Tesla accepts USDC, MercadoLibre processes remittances via stablecoins, Asian banks settle trade finance in JPM Coin. The global tokenization train hasn't just left the station - it's accelerating without Brazil on board.

Systemic Isolation: Closed Rails vs. Open Ecosystems

Drex is settlement infrastructure, but infrastructure shapes entire ecosystems. The choice between closed and open rails defines the country's technological future:

Historical infrastructure lessons:

• SWIFT (1973): Closed infrastructure → traditional banking ecosystem, controlled by few
• Internet (1990s): Open infrastructure → explosion of applications (Google, Amazon, Facebook)
• Ethereum (2015): Open infrastructure → $45 billion in DeFi applications in 8 years

The question is not Drex vs. DeFi, but what type of infrastructure Brazil chooses as its foundation:

Closed model: Drex → applications limited to incumbent banks, controlled innovation        

Open model: Interoperable rails → global fintechs + DeFi + tradfi competing        

Drex operates on an isolated permissioned network, without interoperability pilots with global systems. This architectural choice is not technical - it is political, and will be costly:

Comparison with global initiatives:

• mBridge (China, UAE, Thailand, Hong Kong): $22 billion in cross-border pilot transactions
• Project Jura (France, Switzerland): Cross-border settlement tests between CBDCs
• Project Dunbar (Singapore, Australia): Multi-CBDC platform for international payments

Brazil was left out of all these initiatives. While other countries test CBDC interoperability, Drex remains a domestic project without clear global strategy.

Sanctions Vulnerability: The Illusion of Protection

The narrative that Drex protects against sanctions is technically naive. Modern sanctions are multidimensional:

• Correspondent banking sanctions: Block access to SWIFT and clearing systems
• Asset sanctions: Freeze international reserves (like $300 billion in Russian assets)
• Technological sanctions: Restrict access to critical infrastructure components

Drex solves none of these pressure vectors. Worse: by isolating Brazil from emerging global standards, it reduces future strategic options. When Brazilian companies need to transact internationally, they will use American stablecoins - not isolated BRL tokens.

Lack of Fungibility: Monetary Fragmentation by Design

Drex's architecture creates multiple Brazilian digital currencies through institution-specific deposit tokens. Itaú tokens (AA- rating) differ from Banco Inter tokens (BBB rating), creating risk spreads that fragment liquidity.

Practical problems already observed in pilots:

• Token spreads: Up to 15 basis points between different institutions
• Liquidity traps: Tokens from smaller banks accumulate without efficient conversion
• Operational complexity: Companies need to manage multiple wallets and token types

Brazilian deposit tokens are domestically fragmented. How can one compete globally with architecture that cannot unify even the domestic market?        

The Lost Opportunity: BRL Stablecoins vs. Isolated CBDC

While Brazil mobilizes significant public and private resources for Drex, at a time of reduced technology budgets, it ignores a superior monetary strategy: Brazilian real stablecoins backed by public bonds. This approach would generate organic international demand for reais - exactly the opposite of the isolation promoted by the current model.

BRL Stablecoin: Demand Generation vs. CBDC

BRL Stablecoin model backed by public bonds:

• Multiplied demand: To issue 1 BRLU (BRL globally-accessible), one would need to buy reais + Treasury bonds
• International buying pressure: Each stablecoin created = purchase of reais + investment in Brazilian debt
• Yield distribution: Stablecoin would pay interest based on underlying bonds
• Smart seigniorage: Brazil receives reais + issues remunerated bonds

CBDC Drex:

• Zero external demand: No reason for foreigners to acquire isolated digital BRL
• Internal substitution: Only replaces existing physical/digital reais
• Pure cost: $ millions investment without monetary return

Use Cases That Generate Real Demand

International Remittances ($6 billion annually in Brazil):

• Brazilian abroad buys BRLU → demand for reais
• Family in Brazil converts via local exchange
• Result: Buying pressure + cost reduction vs. SWIFT

Trade Finance ($120 billion in exports):

• Exporters receive in BRLU backed by Brazilian bonds
• Importers pay in stablecoin with Brazilian yield
• Result: Real internationalization without exchange risk

DeFi Integration:

• BRLU as collateral in global protocols (Compound, Aave)
• International yield farming financed by Brazilian bonds
• Result: Global capital investing in Brazil via DeFi

Direct Comparison: Demand for Real

BRL Stablecoin Model:

Global Adoption → Real Purchase → Bond Purchase → Sustained Demand
    ↓              ↓                ↓               ↓
International Use → Buying Pressure → Public Financing → Strong Real
        

Drex Model:

Domestic Use → Paper Substitution → Zero External Demand → Global Irrelevance
    ↓             ↓                    ↓                    ↓
Isolation → Fragmentation → Lack of Liquidity → Marginalized Real
        

Precedents Proving Superiority

USDC (Circle):

• Backed by US Treasury bonds
• $50+ billion in circulation
• Massive demand for dollars + American bonds

Tether (USDT):

• $120 billion market cap
• Largest artificial demand for dollars in history
• US exports monetary hegemony via private stablecoins

Brazil (wasted opportunity):

• Potential of $5-15 billion in BRLU circulating globally
• Direct public debt financing via international demand

Chooses technological isolation instead of monetary strategy        

Why Does the BCB Reject the Superior Model?

1. Preference for Control over Efficiency

• Private stablecoin = less direct BCB control
• CBDC = total monitoring of each transaction
• Regulator vs. monetary strategist mentality

2. Capture by Banking Incumbents

• Traditional banks prefer Drex (they control issuance)
• Open stablecoin = competition with banking oligopoly
• Lobbying to protect traditional margins

3. "Not Invented Here" Syndrome

• Stablecoin = "external" technology (public blockchain)
• CBDC = "controlled" technology (proprietary infrastructure)
• Institutional pride vs. economic optimization

The Mathematics of Lost Opportunity

BRL Stablecoin Potential (conservative):

• Remittances: $2 billion in circulating BRLU
• Trade Finance: $8 billion in settlements
• DeFi Collateral: $3 billion in international protocols
• Total: $13 billion in additional demand for reais

Direct fiscal benefit:

• 13 billion × Selic rate (10.5%) = $1.37 billion annually in received interest
• Public bond demand = reduction in financing cost
• Issuer revenue = additional regulatory revenues

Drex (realistic projection):

• Domestic volume: $500 million (2026)
• International demand: Zero
• Fiscal benefit: Zero
• Cost: $ millions + operational costs

The math doesn't add up: Brazil chooses to spend hundreds of millions on a solution that generates no international demand, ignoring a model that would create billions in buying pressure for reais and Brazilian bonds.

The Fatal Deviation: Proven Demand, International Capture

While Brazil mobilizes significant public and private resources for Drex, at a time of reduced technology budgets, Brazilian assets are being tokenized by foreign platforms. The demand exists - it's being captured by other countries:

1. Tokenized Commodities Market:

• Trafigura tokenized $1.8 billion in crude oil (2024)
• Glencore tests copper and zinc tokenization
• Brazilian gap: Zero domestically tokenized commodities, $120 billion exported annually

2. Carbon Credits:

• Global market: $909 billion (2024)
• Brazil: 15% of world credits, 2% of tokenization
• KlimaDAO, Toucan Protocol: $2 billion in carbon tokens, zero Brazilian

3. Real Estate Investment:

• RealT: $89 million in tokenized American real estate
• Fundshares: €156 million in tokenized European REITs
• Brazil: Zero regulated real estate tokenization platforms

4. Trade Finance:

• JP Morgan: $300 billion processed via JPM Coin
• HSBC: $250 billion in digital letters of credit
• Banco do Brasil: Still uses SWIFT for 95% of operations

Furthermore, Brazil has a vibrant fintech ecosystem, with players like BRLA, Transfero, Mercado Bitcoin, and Foxbit, which already explore tokenization on a small scale. A regulatory sandbox, inspired by Singapore's model, could encourage these companies to develop local tokenization platforms, reducing dependence on foreign infrastructures. For example, tokenization of agricultural receivables ($180 billion in stock) by Brazilian fintechs could generate $50-100 million annually in regulatory revenues, keeping Brazil competitive in the global market.

Market Evidence: Where Companies Actually Innovate

Real-time adoption data (2025):

• DeFi volume in stablecoins: $2 trillion annually
• Remittances via stablecoins: 12% of global total ($95 billion)
• Tokenized trade finance: $45 billion in digital letters of credit
• Real asset tokenization: $120 billion in RWAs on public blockchains

Drex volume: Zero. Conservative forecast for 2026: $500 million domestic.

The math doesn't work: Brazil invests in infrastructure that will process 0.025% of global tokenization volume.

Centralization: The Legacy of SPB (Brazilian Payment System)

Drex inherits structural vices from the Brazilian Payment System: excessive bureaucracy, glacial speed of changes, capture by incumbents.

Concrete examples of institutional slowness:

• PIX: 5 years between conception and launch for basic functionality
• Open Banking: 3 years delay vs. original schedule
• Drex Phase 1: Delayed 8 months, scope reduced by 40%

Comparative innovation speed:

• Ethereum: 2-3 technical upgrades per year
• Base (Coinbase): Protocol deployment in weeks
• Drex: Quarterly Working Group meetings for minimal changes

Uncomfortable question: How can infrastructure that takes months to approve simple changes compete with protocols that adapt in real time?

Historical Context: SPB and Progressive Instrumentalization of Financial Control

The SPB was created in the 2000s as a legitimate technical response to the banking crises of the 90s and the need for systemic stability post-hyperinflation. Centralization was not born with authoritarian purposes - it arose from the need for rigorous supervision in a high economic volatility environment.

However, all centralized infrastructure can be politically instrumentalized, and Brazil demonstrates this pattern in an accelerated and measurable way since 2019. PIX, launched in 2020 as a technical innovation for financial inclusion, exemplifies this progressive capture.

Verifiable Data on Instrumentalization (2020-2025):

Documented evolution of financial blockades via STF:

2021:

• September: Blocking of "various PIX keys and bank accounts" of rural associations and people linked to September 7 demonstrations

2022:

• November: 43 bank accounts of people and companies blocked for "suspicion of financing anti-democratic acts"
• December: 168 social media profiles blocked simultaneously + bank account blockades in 8 states (Acre, Amazonas, Rondônia, MT, MS, PR, SC, DF)

2024:

• August-September: R$18.3 million blocked from companies X and Starlink, subsequently transferred to the Union
• August: Complete suspension of X network in Brazil

Documented escalation of control:

• More than 255 search and seizure decisions, 350 banking and telematic secrecy breaches, more than 800 investigations

Drex as Exponential Amplifier

Drex inherits this centralizing infrastructure from SPB, but represents a qualitative leap in control: from monitoring to total programmability. Unlike PIX (which transfers existing money), Drex is the money itself, allowing:

• Programmed expiration of resources
• Automatic geographic restrictions
• Category-specific spending blocks
• Unilateral transaction reversibility

The concern is not paranoia - it's mathematical extrapolation based on public data. If 43 accounts were blocked for "suspicion of financing" using PIX, what prevents total control via programmable CBDC?         

The difference is that, with Drex, control would be technically irrevocable and politically irresistible.

The Democratic Contrast: Why Global Powers Reject CBDCs

The disparity between the Brazilian approach (Drex acceleration) and that of more democratically consolidated countries is revealing. It's not just about differences in currency power, but fundamental values about the state's role in citizens' financial lives.

United States: Organized Institutional Resistance

The American Congress created explicit legislative barriers against CBDCs, demonstrating how mature democracies protect fundamental rights:

CBDC Anti-Surveillance State Act (Tom Emmer - R-MN):

• 2023: Approved in Financial Services Committee by 27-22 votes
• May 2024: Approved in House by 213-192 (3 Democrats voted in favor)
• 2025: Reintroduced with support from 114 co-sponsors and President Trump's endorsement

Specific reasons cited by legislators:

• "CBDCs can be used to monitor and restrict Americans' transactions" - Rep. Tom Emmer
• "Would violate separation of powers and expose Americans to unconstitutional financial surveillance" - Club for Growth
• "Would transform the Fed into a retail bank with power to collect financial data" - American Bankers Association

13 American states approved laws restricting CBDCs (2023-2024): Indiana, Florida, Alabama, South Dakota, Texas, Utah, South Carolina, among others, for financial privacy protection and prevention against "weaponization" of the federal financial system.

United Kingdom: Official Skepticism and Popular Resistance

Andrew Bailey, Bank of England Governor (2024-2025):

• "I question whether creating new money is better than digitizing existing payment systems"
• "I am not convinced that the United Kingdom needs a CBDC"

House of Lords Economic Affairs Committee (2022):

• Official report: "CBDCs: a solution in search of a problem?"
• Conclusion: "There is no convincing case for CBDC in the United Kingdom"

Public consultation (2023-2024): 51,529 responses - predominantly negative feedback about privacy, government control and real necessity.

The Global Pattern: Democracies Reject, Authoritarianisms Adopt

Countries that abandoned retail CBDCs:

• Canada (2023): Cancelled project after public consultations
• Australia (2024): Abandoned digital dollar plans
• Singapore: Focus on wholesale, not retail

Countries accelerating CBDCs:

• China: Digital yuan with integrated social credit system
• Russia: Digital ruble to circumvent sanctions
• Brazil: Drex without significant legislative debate

Why is Brazil Different?

1. Absence of Democratic Debate:

• USA: 114 legislative co-sponsors + debate in 13 states
• UK: 51,529 responses in public consultation
• Brazil: Technical BCB decision without significant legislative debate

2. Lack of Institutional Checks and Balances:

• USA: Congress, federal states, banking associations in opposition
• UK: Parliament, House of Lords, mandatory public consultations
• Brazil: Decision concentration in Executive via BCB

Resistance to CBDCs in consolidated democracies is not accidental - it's systemic. If countries with hegemonic currencies and consolidated democratic systems reject CBDCs due to surveillance and control concerns, why does Brazil - with recent history of political instrumentalization of financial tools - accelerate in the opposite direction?        

BRL Settlement vs. Global Relevance: The False Trilemma

The original article was questioned about international demand for tokenized real. The objection misses the central point: it's not about demand for BRL, but about Brazilian infrastructure for globally relevant assets.

Brazil possesses globally interesting assets:

• Commodities: $120 billion in annual exports
• Carbon credits: 40 million tons CO2 traded
• Agribusiness: Soybeans, corn, sugar represent 25% of global exports
• Renewable energy: Potential of 500 GW in wind and solar

Strategic question: Why aren't these assets tokenized in open Brazilian infrastructure, globally connected? Why do companies use American or European platforms to tokenize Brazilian assets?

The problem is not being local - it's being closed. BRL settlement is a necessary anchor, but technological isolation is a self-destructive choice.

Prospective Scenario: Conservative Methodology, Alarming Numbers

Base of tokenizable Brazilian assets (conservative methodology):

• Exported commodities: $120 billion/year
• Real estate market: $1.2 trillion (stock)
• Corporate receivables: $180 billion (stock)
• Potential carbon credits: $45 billion (next 5 years)
• Total addressable: $1.545 trillion

Realistic tokenization rate (based on similar markets):

• Conservative: 2-3% by 2030 = $31-46 billion
• Moderate: 5-7% by 2030 = $77-108 billion
• International benchmarks: Singapore (8% of trade finance), UAE (12% of carbon credits)

Revenue potential for the country:

• Licensing rate: 0.1-0.3% on volume
• Estimate: $50-300 million annually in lost regulatory revenues

2027-2030 projection under current trajectory:

Scenario A - Isolated Drex (current trajectory):

• Domestic volume: $2-5 billion
• Participation in global tokenization: <0.1%
• Brazilian fintechs: Migrate to American stablecoins
• Brazilian assets: Tokenized on foreign platforms

Scenario B - Open Tokenization (lost opportunity):

• Accessible global volume: $500 billion+
• South American hub: 15 connected countries
• Fintechs: Global Brazilian ecosystem
• Regulatory revenue: $2 billion in licenses and fees

Causal analysis based on controlled cases:

Countries with initial conditions similar to Brazil:

Singapore vs. Hong Kong (2019-2024):

• Similar conditions: Asian financial hubs, English, rule of law, infrastructure
• Difference: Singapore adopted crypto sandbox, Hong Kong resisted until 2023
• Result: Singapore attracted 800 crypto firms, HK lost 200 to rival jurisdictions

UAE vs. Saudi Arabia (2021-2024):

• Similar conditions: Petro-states, sovereign wealth funds, economic reforms
• Difference: UAE created crypto zones (ADGM), Saudi maintained traditional approach
• Result: UAE received $25 billion in crypto investment, Saudi <$2 billion

United Kingdom vs. Germany (2023-2024):

• Similar conditions: Large European economies, financial tradition, resources
• Difference: UK accelerated stablecoin regime, Germany maintained bureaucratic caution
• Result: 40% of European fintechs migrated to London

Control for other variables:

• All had: Infrastructure, capital, talent, regulatory capacity
• Independent variable: Speed of crypto/tokenization adoption
• Consistent result: Early movers captured disproportionate market share

Causality reinforced by timing:

• Advantages existed before tokenization (infrastructure, capital, talent)
• Acceleration occurred only post-adoption of clear regulatory frameworks
• Reversal: Countries that retreated quickly lost market share

The opportunity cost of the current strategy is measurable: between $50-100 billion in economic activity that will occur outside Brazil.        

Strategic Urgency: Irreversible Milestones, Real Window

Global timeline based on concrete regulatory milestones:

Already defined irreversible milestones:

• Q4 2025: Genius Act operational, American stablecoins consolidated
• Q2 2026: EU MiCA implementation, digital euro pilot
• Q4 2026: UK stablecoin regime, London hub established
• 2027: China expands CBDC to international trade

Historical evidence of first-mover advantage:

• Singapore (2019): First crypto sandbox → today 40% of Asian crypto firms
• UAE (2021): First clear regulation → $25 billion in investments (2022-2024)
• United Kingdom (2023): Stablecoin regime → 60% growth in fintechs

Network effects in financial infrastructure:

• Metcalfe's Law: Network value = n² (number of users)
• First 3-5 years: Definition of dominant global standards
• Post-consolidation: 10x higher entry cost for new entrants

Window based on investment cycles:

• 2025-2027: Series A/B rounds in tokenization ($15 billion globally available)
• 2028-2030: Market consolidation, less capital available for new players
• Post-2030: Mature market, high barriers for new entrants

Brazil is at the end of the opportunity window, not the beginning.

Conclusion: The Price of Miscalculated Sovereignty

Drex has evident technical merits, but its structural limitations - technological isolation, monetary fragmentation, bureaucratic speed and global irrelevance - fatally compromise its ability to position Brazil in the emerging digital economy.

The math is simple: Brazil invests scarce resources in infrastructure that will process <1% of global tokenization, while losing the opportunity to capture 15-20% through intelligent regulation of open tokenization.

This is not about abandoning Drex, but recognizing that sovereignty without relevance is self-destructive isolation. Brazil urgently needs to pivot to a hybrid strategy: Drex as domestic anchor + open tokenization regulation to capture global flows.

Time is the scarcest asset. With each quarter of delay, the cost of entry into the global market increases exponentially. The question is no longer "if" Brazil will change strategy, but "when" - and whether there will still be time.

Analysis based on public market data and direct technical experience. Conclusions reflect independent assessment of strategic risks of the current trajectory.