Visa unveils blockchain-backed CBDC project for Brazilian farmers

Payments giant Visa (NASDAQ: V ) has unveiled a central bank digital currency (CBDC) project as part of efforts to explore new uses for the Brazilian economy.

The new project puts a premium on SMEs in Brazil to help them access global funding and improve operational processes, local news agency Livecoins reported. Farmers appear to be the target market for Visa’s project, noting that they contribute a large portion of Brazil’s GDP and are in dire need of new financing options.

Currently, financing options available to Brazilian farmers are plagued by sky-high interest rates and other bureaucratic bottlenecks that negatively affect their operations. Visa’s new solution allows farmers to create tokenized contracts on Ethereum for global investors to invest in local operations.

Visa notes that its solution stands out from the rest of the pack, given the use of its proprietary technology called the Universal Payment Channel (UPC) to enable interoperability between different forms of digital assets. The firm enlisted Microsoft (NASDAQ: MSFT ) to help with Know Your Customer (KYC) requirements to comply with anti-money laundering regulations.

“As we introduce new blockchain-based technologies, further democratize equity financing, increase market competition and expand financial inclusion, we are able to help SMEs finance their business operations in a simpler, more accessible and secure way,” said Vanesa Meyer , Visa’s head of innovation and design.

In 2022, the Brazilian central bank selected Visa and eight other firms to explore real-world use cases for digital reality from a pool of over 40 companies that indicated interest. DeFi platform Aave was chosen to explore the possibilities of peer-to-peer lending, while Banco Santander Brasil and Itau Unibanco were chosen to investigate the tokenization of real estate and international payments, respectively.

It is still unclear when the central bank will launch the digital reality, but in March the CBDC debuted on a publicly distributed ledger to gauge interest.

Expanding the use cases for CBDCs

Central banks around the world are integrating many features into their planned CBDCs to lure users away from existing payment options. For most central banks, the possibility of cross-border payments to reduce the cost of remittance is seen as a viable means of increasing the adoption rate.

The People’s Bank of China (PBoC) has integrated offline payments functionality into its CBDC pilot, while also giving the green light for its use in securities trading. Furthermore, the red envelope functionality, in line with Chinese New Year traditions, played a major role in building the growing number of users for the digital yuan.

To learn more about the central bank’s digital currencies and some of the design decisions to consider when creating and launching it, read on nChain’s CBDC Playbook.

See: Blockchain provides perfect foundation for CBDC

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