The developer claims that the CBDC pilot program in Brazil has a code that may freeze or limit money

To freeze or drain accounts at will, according to blockchain developer Pedro Magalhes, who claims to have reverse-engineered Brazil’s prototype CBDC.

Claiming to have reverse-engineered the source code of Brazil’s pilot central bank digital currency (CBDC), a blockchain developer has found features in the code that would enable a central authority to freeze payments or lower holdings.

However, he has subsequently suggested that there are circumstances in which such features might be useful.

The Brazilian central bank released the digital Brazilian real pilot project’s source code on the GitHub domain on July 6. It was mentioned at the time that the pilot project is intended for usage solely in a test environment and that the “presented architecture” may be subject to subsequent alterations.

Accounts could be frozen or unfrozen, balances could be increased or decreased, funds could be transferred between addresses, and digital real could be created or destroyed at a given address.

For secured loans and other financial activities based on decentralized finance (DeFi) protocols, Magalhes told Cointelegraph that Brazil’s central bank will “probably” preserve these responsibilities.

Magalhes noted that the issue is due to a lack of clarity in the code on who has the authority to perform the token freezes and under what conditions.

“It’s one thing to agree with an operation and execute a DeFi operation involving different blockchains; it’s something entirely different for an institution to be able to freeze the balance on its own initiative, and that’s exactly how they’ve developed the smart contracts.”

Many people in the crypto industry are worried that a CBDC would restrict their ability to make their own financial decisions and will invade their privacy.

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