Here’s Why Project Tourbillon Is the CBDC Answer for Crypto
- The BIS Innovation Hub has introduced an approach to maintain payer anonymity in CBDC transactions.
- Project Tourbillon has challenged illicit transactions while preserving consumer privacy.
- The ability to integrate into existing payment infrastructure has stood out.
The Bank for International Settlements (BIS) Innovation Hub has released the final report on its private central bank digital currency (CBDC) project, Project Tourbillon. The report outlines the development of prototypes that could enable payer anonymity for CBDC transactions.
Project Tourbillon: The CBDC with Full Anonymity
Project Tourbillon explored the concepts of privacy, security, and scalability using two prototypes based on the designs of cryptographer David Chaum. The prototypes, eCash 1.0 and eCash 2.0, provide unconditional payer anonymity and resilient security features.
Project Tourbillon demonstrates the feasibility of implementing a CBDC that maintains payer anonymity while combating illicit transactions.
This is achieved by preserving the consumer’s complete anonymity during the transaction with the merchant. Under the proposed system, merchants would be known to payers but not to the central bank, enabling the latter to monitor CBDC circulation at an aggregate level.
Project Tourbillon’s Answer to Money Laundering
However, to ensure compliance with regulatory requirements such as Anti-Money Laundering, Countering the Financing of Terrorism, and tax evasion laws, all users must undergo a Know Your Customer procedure at a commercial bank before using the CBDC.
The report highlights the ease of integrating Tourbillon’s payment process into existing payment infrastructure, utilizing QR codes, proof-of-stake protocols, and existing account relationships between customers, merchants, banks, and central banks.
On the Flipside
- Complete anonymity for payers might raise concerns among regulatory bodies and governments, as it could hinder their ability to monitor and enforce compliance with anti-money laundering and counter-terrorism financing laws.
- The reliance on Know Your Customer procedures at commercial banks before using the CBDC might create barriers to financial inclusion for individuals without access to traditional banking services or identification documents.
Why This Matters
This development, focusing on preserving payer anonymity while addressing regulatory concerns, not only marks a pivotal moment in CBDC evolution but also sets a crucial precedent for privacy-centric approaches in future financial technologies.
To learn more about China’s CBDC test involving the e-yuan and Standard Chartered, read here:
Standard Chartered Drives E-Yuan Trading in China’s CBDC Test
To explore South Korea’s plan for a comprehensive CBDC pilot in 2024, read here:
South Korea Unveils Plan for Comprehensive CBDC Pilot in 2024
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
VanEck’s Matthew Sigel Defends Ethereum’s Strong Utility Despite Bearish Market
![](https://img.bitgetimg.com/multiLang/image/social/e201343e99422f1587dcca6032544c281725741543205.jpg)
How Solana is Surpassing Ethereum in Blockchain Performance
![](https://img.bitgetimg.com/multiLang/image/social/19c85f4faba5949f3815555cb0a7c7711725741542820.jpg)
Debunking Bitcoin Myths: Separating Fact from Fiction in Cryptocurrency
![](https://img.bitgetimg.com/multiLang/image/social/946e527ab045281260662008d4e7ed021725741542403.jpg)
Fundstrat Analyst Predicts End of Nvidia Stock Decline, Hints at Crypto Market Recovery
![](https://img.bitgetimg.com/multiLang/image/social/919327f5a58cc6a19cd093f007645d3d1725741541939.jpg)