#161: Brazilians moved US$90 billion of crypto last year: Chainalysis
Aaron Stanley
Builder | Creator | Catalyzer | Dot-Connector | Brazil | Web3 | Digital Assets
Plus: Exchanges team up to launch new BRL stablecoin; CVM says tokenization is here to stay
Olá pessoal!
Welcome back to ????Brazil Crypto Report for the week of October 7-11. 2024.
The annual Chainalysis Geography of Cryptocurrency dropped last week and has some super interesting insights about crypto adoption in the region and how it has grown substantially vis-a-vis other parts of the world over the last 12 months.
Read on for some of the Brazil-specific highlights, and you can read here the full excerpt from the report highlighting Latin America.
?? Big thanks to the Chainalysis team for highlighting BCR in this year’s report!
?? What’s in this week’s BCR?
Thanks for reading and have a great week!
-AWS
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This week’s interview is with Gladstone Arantes Jr, DSc , a blockchain specialist at BNDES — which is Brazil’s national development bank and one of the largest such institutions in the world.
Gladstone is the coordinator of the Brazilian Blockchain Network (known as RBB in Portuguese), which is a public permissioned chain that aims to develop government and public sector blockchain use cases in Brazil. This is a super interesting project that has potential to transform public service delivery in Brazil so definitely worth a listen.
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Chainalysis: Brazilians moved US$90 billion in crypto in 2023-24 as institutions return
Brazil saw inflows of US$90 billion worth of crypto between July 2023 and June 2024, blockchain analytics firm Chainalysis reports in its 2024 Geography of Cryptocurrency report.
Of that volume, 60% passed through large institutional investors while retail investors (who invest up to US$10,000) made up just a 6% share. Small investors who invest less than US$1,000 accounted for just 1.4% of the total volume.
Chainalysis noted that the uptick in institutional investor interest is a notable uptick from the previous period:
“In last year’s report, we noted that despite Brazil’s historically well-developed institutional cryptocurrency market, institutional activity declined in early 2023, which likely coincided with the global bear market..However, this trend reversed in the middle of last year and has increased since then, suggesting renewed interest from large financial institutions.”
The report also found that crypto transactions in Brazil over US$1 million grew 48% in 1Q of 2024 compared to 4Q of 2023 , illustrating the institutional trend.
Brazil’s total volume received was second in the region, trailing Argentina which checked in at US$91.1 billion.
As a whole, crypto activity in Latam was up ~40% year-over-year, the second-highest increase globally behind Sub-Saharan Africa.
Exchanges team up to launch new BRL1 stablecoin
Mercado Bitcoin, Bitso and Grupo Foxbit are teaming up to launch a new Brazilian Real-pegged stablecoin called BRL1 via a new consortium. BRL1 will be pegged 1:1 to the real and will be backed by Brazilian Treasury bonds.
The consortium would allow withdrawals and transfers of crypto between platforms without needing to pass through a traditional financial institution. Put differently, purchases and sales between exchanges can be made directly without need for intermediation by a Tradfi bank.
Fabrício Tota , director of New Business at Mercado Bitcoin, explained that such a design will have more impact on average users in Brazil
“The use cases for dollar stablecoins are very niche, such as cross-border payments, exposure to dollars, and use in decentralized finance, but they do not have as much of an impact on the average user, who has an account in reais, uses reais in their daily lives, but who still did not have the option of having reais in a digital form outside of the traditional financial system.”
Bárbara Cabrera Espir , director of Bitso Brasil , added:
“We are building all the details of this project very carefully so that BRL1 benefits the maximum number of people and companies operating in Brazil and explores the potential of stablecoins to promote local transactions and cheaper, faster and more transparent international payments.”
Ca?nvest Group , the largest institutional crypto liquidity provider in Brazil, is also a member of the consortium. It will provide liquidity in the BTC and ETH pairs listed against BRL1. Fireblocks and Pinheiro Neto Advogados are also involved as service providers.
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The idea is to eventually integrate BRL1 into the Drex system being developed by the Central Bank of Brazil. The asset will become available on participating exchanges later this year.
CVM: Asset tokenization is here to stay but must be compliant
Leaders of the CVM — Brazil’s securities regulator — argued that the asset tokenization business model is here to stay as a fundamental improvement in how investment products are distributed.
Speaking at the Tokenize event hosted by Núclea and FEBRABAN , Antonio Carlos Berwanger of the Market Development Superintendence explained:
"I'll start with a statement that may be obvious to many, but I think it's important to say: tokenization is here to stay, and we're getting closer and closer to large-scale adoption.”
Jo?o Pedro Nascimento Nascimento, president of the agency, argued that tokenization has expanded much further beyond simple transaction methods:
"Initially, the use of technology, especially tokenization, was closely related to the economy and payment methods. Today, I see tokenization as something that is here to stay.”
He added that the cryptoeconomy will become a powerful medium for enforcing public policies as adoption grows, and discussed the importance of mitigating risks — reiterating calls for asset segregation :
"It is crucial that, when addressing the issue in the legislative and regulatory spheres, we know how to modulate these risks. The first essential measure is asset segregation.”
Also speaking at the event, Central Bank consultant Antonio Guimaraes discussed how the benefits of tokenization go far beyond simply eliminating intermediaries. Rather, they make it possible to eliminate overlapping information collection and validation processes and increase interoperability between systems.
"The great advantage of tokenization is that the token incorporates both the data and the business model.”
He also highlighted how the tech and the Drex system can potentially create secondary markets to transform illiquid assets into liquid ones, but warned that a lack of legal clarity for tokenized assets remains a major obstacle.
“Investors are afraid of punishment and uncertainty about how their operations will be treated by current legislation.”
CVM and ABCripto launch new tool for identifying crypto scams
ContraGolpe is a platform that prompts users to answer a series of questions about a new investment offering, with the goal of reducing the likelihood of the investor buying into a scam. At the end of the quiz, ContraGolpe provides a report with education and recommendations to help the investor make a better decision.
Nathalie Vidual , superintendent of Investor Guidance and Sustainable Finance at CVM, said:
“Given a constantly evolving technological scenario, it is essential to offer mechanisms that enable investors to recognize potential fraud and make safer and more informed decisions.”
1inch founder says Drex is a “weak attempt” to merge CeFi and DeFi
Anton Bukov , co-founder of the 1inch decentralized exchange, told CoinTelegraph Brasil that Drex cannot fulfill its potential if it lives on a private blockchain like Hyperledger Besu.
“Drex, the Central Bank of Brazil’s CBDC, is a promising start, but it is still a relatively weak attempt at true integration with the crypto market. For a CBDC like Drex to have meaningful interaction with the broader crypto ecosystem, it would need to be issued on the Ethereum mainnet or at least on a Layer 2 solution, even if it is a permissioned L2.”
“Without this level of integration, Drex remains somewhat isolated from the true potential of the crypto market.”
??Brazil Crypto News Rundown
?? Markets
"Meli Dólar is a great opportunity for customers to have access to a dollar-pegged crypto asset, even considering the real's fluctuations against the dollar, but also for us to strengthen our loyalty program. Meli Dólar joined the program because we believe in crypto assets.”
"We are focusing on international transactions. Traditionally, there is a very intense flow of transactions involving North America, Europe, and Latin America. It is a market that already existed before crypto, and the crypto option can be a popular way to transfer value.”
"I believe that when you see the fiscal deficits that exist in all governments around the world, having a currency that governments cannot devalue like bitcoin is something absolutely fundamental to me, and I also believe that it is a currency that gives freedom to people and individuals regardless of governments. This is super valuable for society, for people.” (Exame ) (CriptoFacil ) (CoinTelegraph Brasil )
?? Adoption
“Institutions operating in the financial market that necessarily have the capacity to test the proposed business model, including transactions for issuing, redeeming or transferring assets, as well as to execute the simulation of financial flows resulting from trading events, when applicable to the case under test, may participate in the pilot project.” (Valor ) (Valor Investe ) (Exame ) (BlockNews ) (CriptoFacil ) (CoinTelegraph Brasil )
?? Policy, Regulation and Enforcement
"These money launderers are allegedly responsible for currency evasion and money laundering for a variety of crimes throughout Brazil, in a practice known as "crypto-cable.” (Valor ) (InfoMoney ) (CriptoFacil )
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Full article on Substack: https://newsletter.brazilcrypto.io/p/161-brazilians-moved-us90-billion