Drex is latest chapter in Brazil’s data protection saga

The Brazilian Central Bank recently provided updates regarding the timeline for Drex, the country’s new digital currency. It stated that development is slower than initially predicted because the privacy and data protection measures currently in place are not robust enough to meet the requirements of the LGPD, the Brazilian data protection legislation.

While the authority did not give specific details about the issue, it’s worth noting that Drex is being developed using blockchain technology, which, in general, presents challenges to most existing data protection frameworks.

A study in Europe on the interaction between the European Union’s General Data Protection Regulation (GDPR) and blockchain highlighted that tensions arise from two main factors. Firstly, the existing laws tend to assume that each personal data point can be addressed by one single data controller which will enforce the rules put forward in the legislation. But this assumption simply doesn’t hold in the case of blockchain, as it is a distributed database.

Secondly, erasing or changing data in order to make it compliant with the legislation is not how blockchain operates, for the network retains information developed previously in order to ensure integrity. 

Although the study did not focus on...