The crypto ecosystem in Brazil: a tangible reality

According to the latest statistics published by Global Digital, Brazil ranked the sixth most crypto-friendly countries in the world?

The research has concluded that around 40 million Brazilians use cryptocurrencies. The population has really embraced cryptocurrency as an investment opportunity and it is now becoming something usable in the real economy. An example is the event market, which increasingly sells tickets in cryptocurrency to the public.

However, despite the growth, there are very few regulations on the cryptocurrency market in Brazil.

One of the main current movements regarding crypto regulation is the creation of Real Digital, the digital version of Brazil’s national currency, that has been debated at the central bank since 2015 and will have its first tests in 2023.?

Real Digital

One of the biggest advantages is that, with the implementation of Real Digital, there will be mechanisms that can freeze citizens' conversion to CBDCs in the event of a bank run.?

Furthermore, through Real Digital, the central bank will enable so-called "smart payments" within a fully regulated environment. Smart payments include smart contracts, transactions with Internet of Things devices, and even decentralized finance (DeFi) applications.

Partnership with the private sector

The central bank must partner with the private sector in providing liquidity to the market. It should even provide for the coexistence between Real Digital and private money issued by institutions regulated by the CBB in smart payments.

Therefore, citizens will be able to convert their deposits into tokens, on the condition that these tokens will be converted into Digital Real. This means that financial institutions will be able to issue their own tokens intended for smart contract applications.The balance in Real Digital will act as guarantor of the operations.

Thus, as fractional reserve requirements, commercial bank deposit tokens would inherit all the regulations and characteristics of their parent assets.In the same way, payment service provider deposit tokens would inherit their characteristics, such as full reserve requirements.

We can conclude that Real Digital will enable the creation of customized financial services through smart contract and programmable money solutions, meeting the different needs of Brazilian society.

These resources, when combined with financial education, can provide better conditions for the entire population of the country, even those "marginalized" by the financial system.