Brazil’s central bank has selected Itaú Unibanco, the country’s largest private bank, to help develop a DeFi liquidity pool. The choice was made under the government’s Financial and Technological Innovation and Technology Laboratory (LIFT) public program.
The pool will use blockchain technology and smart contracts to enable custody of assets, currency exchange, and alternative investments. It is likely to work like stablecoins in that it could shadow the Brazilian real, USD, or some other fiat currency. The platform’s operations may be quite similar to other liquidity pools in the digital asset market.
The Itaú Unibanco proposal is one of eight others chosen by LIFT. Other noteworthy blockchain-related project proposals included Lovecrypto, which proposes to convert a stablecoin on the Celo blockchain into Real Digital, Brazil’s CBDC. Another proposal, from Celso Jungbluth, aims at building a decentralized microcredit marketplace.
Itaú Unibanco’s proposal did not arrive out of the blue. In July, Itaú Unibanco announced plans to launch its own asset tokenization platform. The goal was to use the platform to transform traditional financial products into tokens and offer crypto custody services that could be offered to customers.
The LIFT lab will begin operations on 12 September 2022. Program developers will need to submit a functional prototype and report each project by 15 December.
This is the fifth round of projects selected by LIFT since its launch in 2018. In the last round held in March, LIFT chose nine separate projects aimed at building Brazilian CBDC.