????BCR #49: Binance Resumes BRL Deposits and Withdrawals; Crypto Legislation at an Impasse

NOTE: This is an excerpt from this week's full?????Brazil Crypto Report?newsletter hosted on Substack. Please subscribe and follow the Substack edition for more news, commentary and interviews exploring the Brazil crypto ecosystem.

Fala pessoal!

Welcome to ????Brazil Crypto Report for the week of July 4-8. For US readers I hope you had an enjoyable July 4 holiday. I had a nice vacation in Florida on the Gulf Coast with some family and friends.

???Before we dive in,?friendly reminder that BCR Institutional, our first premium service, will launch later this month July. This product will focus on providing bitcoin and cryptocurrency education to large investors in the Brazil market. It will consist of investor-focused content (in Portuguese), monthly roundtables and networking/chat functions. Stay tuned for more details.

??Binance Re-Enables BRL Deposits and Withdrawals

4 million Binance users in Brazil are able to?deposit and withdraw?via Pix and Ted once again after a 20 day service disruption.?The exchange?suspended?its BRL on- and off-ramp?service?on June 16 amid a legal dispute with Capitual, with whom it severed ties and has since replaced with Latam Gateway, another payment provider.

The BRL deposits and withdrawals were?initially?only available via the Binance website, but app functionality was enabled shortly thereafter. Binance’s withdrawal fee has reportedly?increased?from R$2.60 to R$3.50 under the new system.

Also, A S?o Paulo court?ordered?the blocking of R$452m (US$86m) worth of customer funds held on Capitual as part of the ongoing legal dispute between the two parties.?The ruling ensures that the funds will be available to Binance customers once the legal process is resolved. Portal do Bitcoin has a good?synopsis?of where this situation currently stands if you’re interested in diving in more (also a good one in English?here).

While Binance’s payment woes appear to be resolved, the incident appears to have put a chink in its armor?as its market share of bitcoin trading in the country?dropped?notably. According to?CoinTraderMonitor, Binance processed 54% of bitcoin volumes from June 1-15, but between June 16-30 it made up just 37% of total volume - a 31% decline. We’ll have a better idea once July trading volumes are published in early August.

Despite the disruption, Binance still processed 46% of the ~40,000 bitcoins traded in Brazil during the month, with bitPre?o checking in at 17% in second place.?Also, Binance?announced?on July 8 as part of its five-year anniversary that it would waive trading fees on 13 different trading pairs - including BTC/BRL.

?? Thanks to our partners at?HBAR Foundation?for supporting ???? Brazil Crypto Report! If you're a?Latam?entrepreneur or developer with an up-and-coming project or idea and need some support, take a look at the?HBAR grant program. They're seeding projects focused on DeFi, fintech, NFTs, sustainability and so much more. They also offer a plethora of other resources to help builders bootstrap. Do yourself a favor and check them out! ??

??Crypto Legislation at an Impasse

Deputy Expedito Netto formally?introduced?his updated crypto regulation bill to the Chamber of Deputies last week.?As expected, the updated text created an uproar because it several key provisions added by the Senate were removed.?The most notable is a requirement that foreign crypto brokers immediately create and register a local entity (CNPJ) and begin communicating with tax and AML authorities upon the law being signed.?Netto also struck down the Senate bill’s requirement that brokerage firms segregate company and client assets.

The CNPJ question was a point of confusion in last week’s newsletter, as I had heard differing takes on specifically when this provision would take effect. Upon further research,?I can confirm that the?Senate text gives the standard 180 day window for the law to be implemented, with the?exception?of the CNPJ and AML provisions?- crypto brokers would have needed to immediately comply with these. With that language struck down by Netto, foreign firms will now have 180 days to formalize their operations in Brazil,?same as domestic exchanges that are already registered and have an active CNPJ.

While supported by the likes of Binance, the removal of these provisions was predictably not well?received?by local exchanges and Febraban, which represents Brazil’s banks. ABCripto, a trade group representing the largest domestic brokers,?said?in a note:

“ABCripto is surprised and disagrees with the suppression of these protections in the newly presented report. We ask for the resumption of the text and the approval of such important measures for the security of the Brazilian cryptoeconomy and its timely, opportune and adequate evolution.”

In pushing back against the asset segregation clause, Binance head of Brazil operations Daniel Mangabeira?told?Broadcast Estad?o:

“the PL mixes in the same basket the segregation of assets of financial resources and digital assets. There is a legislative purism there that can cause some confusion if it goes that way”.

Lastly, the import tax exemption on bitcoin mining hardware was also removed.?I strongly recommend having a listen to my podcast interview with Ray Nasser (link below) to better understand how this provision would have boosted the Brazil bitcoin mining industry.

Valor?published?a pretty balanced piece that weighs the pros and cons of removing these provisions, particularly the asset segregation question

?? Upshot: While the bill was added to the Chamber of Deputies’ agenda, it was not brought to the floor for a vote and it is?unclear?if Chamber President Arthur Lira plans to advance it next week. With?time running out?due to an upcoming recess and then election season, the Banco Central still wielding its influence in the process and a full on lobbying war between Binance and 2TM over the CNPJ and asset segregation provisions,?it’s looking less and less likely that this will pass anytime soon.

This has created a sense of urgency among proponents who have labored for years to get the bill to its current stage and are now trying to reverse course and get the removed provisions added back in. Julien Dutra, head of government relations at 2TM,?told?Portal do Bitcoin:

“If we don't approve this now and only wait for next year or November, we could increasingly cause something reckless for the market in terms of systemic risk in competition.”

??Be sure to check out the latest episodes of the ????Brazil Crypto Report?podcast.?I sat down with?Arthur Mining CEO Ray Nasser?to discuss his thesis of Brazil as a dark horse play for bitcoin miners.

I also?chatted?with Fuse Capital co-founder Jo?o Zecchin about his firm’s forthcoming crypto fund, which would be the first dedicated crypto fund in Brazil.

Please head over to this week's edition of ????Brazil Crypto Report?to catch the full version of this newsletter