BIS Says Digital Cash Can Be Private — As Long As Hackers Stick To One Bank At A Time 🔐

The Bank for International Settlements said digital cash can deliver privacy properties similar to physical banknotes, but warned that the underlying technology remains short of "production ready." The findings appeared Tuesday in the Project Aurum Phase 2 report, which details a privacy-preserving digital cash prototype built on BIS's existing Aurum codebase.

According to BIS, the system is designed to balance full anonymity against complete transaction transparency. The report found that a compromise at a single bank would expose that institution's customer data, but would not reveal user identities held by other counterparties. It also concluded that a validator-level compromise alone would be insufficient to unmask end users.

The report outlines the technical features required to build a privacy-preserving central bank digital currency (CBDC), a topic that has drawn scrutiny from privacy advocates. In 2023, Brazil's central bank published the source code for its CBDC pilot, and within days observers identified embedded surveillance and control mechanisms capable of freezing or reducing user funds held in CBDC wallets. Earlier this year, US President Donald Trump moved to bar federal agencies from issuing a CBDC in January, citing financial stability and privacy concerns. Related legislative efforts, including a push by Republican lawmakers for a permanent CBDC ban, remain under consideration in the House.