Crypto Brazil

1. Crypto Going Crazy
2. Crypto ETFs
3. Crypto Tax in Brazil
4. Crypto Stats in Brazil
5. The Experts

Crypto is Going Crazy in Brazil.

With around 2.7 million users Mercado Bitcoin is Brazil’s largest local exchange. In the first quarter of this year Mercado has traded over 5 billion USD. This is an explosion in volume compared to the 1.2 billion that was traded on their platform throughout all of 2020. This last quarter (Q1 2021) is the most volume that has been seen on Mercado Bitcoin’s site in years. Day traders are helping fuel this fire. So is crypto being used as an investment, a remittance tool, and as a store of value.

Brazil has been struggling to recover from the economic effects of Covid. Many are worries about inflation and their own prospects for the future. While the economy did grow more than expected last quarter, the countries inflation rose by over 5% in 2020, the biggest leap in years. The Brazilian Central Bank raised interest rates from a historic low of 2% in an attempt to lower this inflation to a targeted 3.75% Brazil’s unemployment is also at the highest it’s been for 10 years.

The current economic climate in Brazil has forced many to find different ways to generate income. More and more are looking at crypto. It seems a growing number also believe mining crypto could be the answer. The Brazilian Government has data showing a surge in both electrical consumption and in the import of mining hardware. According to information from the Ministry of Industry, Foreign Trade and Services, Brazilian companies have brought in over 106 million real (20 million USD) worth of GPU’s (graphic processing units) The GPU’s are essential computer hardware for any crypto mining rig.

Enel Distribuiçã São Paulo, one of the countries largest power distributers found nearly 70,000 cases of thief from their grid in 2020. This is a 4 times increase from the year before illustrating a degree of desperation in the population as well.

It’s not just the average person leaning into bitcoin and other crypto currencies.  There is also institutional support from the likes of GP Investments and Parallax as they expand into the Brazilian crypto market. Crypto.com has added BRL bank transfers to their fiat wallets, and the Brazilian Portuguese language to both their app and exchange. This will help strengthen the crypto service ecosystem not just in Brazil but throughout Latin America.

Other international players are also testing the water in this hot Brazilian market. Mexico based Bitso, has dedicated millions (62 million USD) to expand into Brazil. While Argentinian based crypto exchange Ripio, which has been operating in Brazil since 2016, has been seeing consistent, 10% growth on their platform, month over month since November 2020.

Crypto ETFs

Crypto EFT’s are another form of institutional support being pioneered in Brazil. One of the world’s first crypto ETF’s, HASH11 began trading on the B3 (Brasil, Bolsa, Balcão), Brazil’s largest stock exchange in late April 2021. Another bitcoin ETF, this one from the Latin America Blockchain investment firm QR Capital, was approved by the Brazilian Securities and Exchange Commission in March and recently started trading on the B3 as well. It can be found under the ticker QBTC11

Trading these ETFs is restricted in Brazil to professional investors with more than 1.79 million USD or 10 million real in Capital. But this is another hurdle leapt for cryptocurrencies legitimacy in Brazil and beyond. These ETF’s are made up of crypto like BTC, ETH, LTC, LINK, BCH, and XLM.

Crypto Tax in Brazil

Much like countries in Africa like Nigeria and South Africa that are quickly adopting crypto currency, government regulations in Brazil are racing to catch up.

There are a handful of tax requirements, but for now the Crypto Space in Brazil continues to be largely unregulated.

In 2019 the RFB, the Brazilian Tax Authority required crypto traders to report transactions over 30000 reals. A Crypto capital gains tax has been on the books since 2014, but only on gains over 35000 real. Crypto laws in Brazil go back as far as 2013. The Brazilian Government considers bitcoin [and other crypto] to be an electronic currency, a “resource, stored on a device or electronic system that allows users to perform a payment transaction.”

Blockchain based technologies are not yet fully endorsed by financial authorities like the Central Bank of Brazil, because of the risks involved. But Brazilian financial authorities have announced a Fin-tech regulatory sandbox that will test 7 different Fin-tech service products over the course of one year. So far 32 projects have applied for approval.

Many major Brazilian banks shut down accounts connected to crypto trading platforms in 2018. (This is still the pervasive attitude of traditional banks when it comes to crypto in Brazil. Though small steps forward are being made.) While the big banks deny this was a coordinated effort to stop crypto firms from doing business in the country, an investigation has been launched by the Brazilian Antitrust Authority to determine any wrongdoing. This investigation is still ongoing.

We are also still waiting to hear on the status of a proposed bill of law made by Senator Sorayh Thronickle to bring legal clarity to the Brazilian crypto space and hold scammer accountable. The bill which is being reviewed in the Brazilian Chamber of Deputies could also see cryptocurrency (and air milage programs) moved under the authority of the Brazilian Central Bank.

Crypto Stats in Brazil

Crypto adoption in Brazil highlights that cryptocurrency continues to be very popular with some of the least wealthy among us. A report done by The Business Administration School of Sao Paulo found that 40% of crypto holders earn below the countries minimum wage of around 234$ USD per month. This report also found most crypto holders in Brazil are young, (40% are between 20-25yrs old), and overwhelming male (92%).

Brazil is the largest, most populous and richest country in Latin America. It has the 5th largest population in the world with 212 million and is ranked 5th in crypto ownership as well.(According to Hootsuite.) Of those 212 million roughly 25% of those are currently unbanked. Those that do bank in Brazil, do most of it on their phones.  Another possible reason for cryptocurrencies surge in Brazil. A report from eMarketer showed 81% of mobile owners in Brazil access their bank via a smart phone app. Which shouldn’t really come as a surprise, Brazilian’s rank quite high in digital adoption globally. Brazilians spending more time on their phones, online, and downloading apps that most other countries. Brazilian’s use social media more than any other nation, averaging 3.5 hours a day and Brazil was just behind the Philippines when it came to accessing the internet with a mobile phone in 2019. (An alarming 9 hours a day) Also supporting this recent boon in crypto adoption.

The Experts Weigh in

Here’s what some of Brazil’s leading Blockchain and Crypto experts have to say about the future of bitcoin, cryptocurrency, and the Fintech space in Brazil and around the world:

Rodrigo Borges of the Oxford Blockchain Foundation said “Regarding bitcoin, I imagine that there will be an increase in demand for institutional investors, enabling the emergence of new products with exposure to bitcoin.” He also said that 2021 will be “…a year of consolidation and strong development in the sector.”

Head of Operations at QR Assets João Paulo Mayall is bullish on the tokenization market in 2021 saying “ I believe that the future is the tokenization of assets, debentures, court bonds, [and] government debts. Brazil is very advanced in its banking system, and we will have many surprises in this sector, so I am very optimistic.”

Blockchain expert Tatiana Revoredo believes the future will see “an increase in the interest of Brazilians[in crypto]…with a prominent role for bitcoin being adopted as a protective asset.” Revoredo also believes we’ll see “…growth of [blockchain] applications [in the Government Sector] in document registration and health applications…”

Edilson Osōrio OriginalMy CEO had this to add to the blockchain conversation “When we look at advances in blockchain with applications beyond digital currency, we see a growing market in the area of decentralized digital identity…and the pandemic has certainly helped to accelerate and advance discussions on the issue around the world, as it understands that the digitization of analog and traditional services are a necessity.”

Sounds pretty bullish.

Resources:

https://www.coindesk.com/crypto-is-booming-in-brazil-but-regulations-lag-behind

https://news.electroneum.com/brazil-a-huge-business-opportunity-where-crypto-is-on-the-rise-among-a-median-population-of-32#

https://news.bitcoin.com/bank-of-brazil-becomes-the-first-state-backed-bank-to-allow-customers-exposure-to-a-crypto-etf/

https://news.bitcoin.com/home-crypto-mining-spikes-in-brazil-amid-record-high-unemployment/

https://cointelegraph.com/tags/brazil

https://www.prnewswire.com/news-releases/cryptocom-launches-brl-bank-transfers-and-brazilian-portuguese-301289882.html

https://cointelegraph.com/news/crypto-and-blockchain-what-the-brazilian-market-can-expect-for-2021

https://www.buyucoin.com/crypto-labs/exchange-traded-fund/

https://newsbinding.com/crypto-currency/bank-of-brazil-becomes-the-first-state-backed-bank-to-allow-customers-exposure-to-a-crypto-etf-finance-bitcoin-news/

Notícias Criptográficas do Brasil | Brazil Cryptocurrency News

Quanto tempo leva para minerar um bitcoin em 2021? (beincrypto.com.br, 28 Fevereiro, 2021)

Criptomoedas desabaram nesta semana; vale comprar agora? (portaldobitcoin.uol.com.br, 27 Fevereiro, 2021)

Brazil’s top exchange announces international expansion after raising $38M (cointelegraph.com, January 22, 2021)

Argentina’s Ripio acquires Brazil’s second-largest crypto exchange (cointelegraph.com, January 6, 2021)

Why is Brazil, a country of contrasts, where the poorest use crypto the most? (electroneum.com)

$200 Million Brazilian Crypto Fraud Scam: The US Seizes $24 Million Worth of Digital Currencies (bitcoin.com, November, 5, 2020)

Brazilian government starts cryptocurrency regulation… too late for some (April 29, 2020)