🇧🇷 Brazil Crypto Report #13: 10% Inflation; Ronaldo and Ronaldino ❤️ NFTs; BTG Pactual's Big Move; Ripio's $50m Raise; Mercado Bitcoin Axes Withdrawal Fees
Welcome to 🇧🇷 Brazil Crypto Report #12 for the week of Sept 20-24. Lots of exciting crypto news and happenings this week - let’s dive right in:
1️⃣ Brazilian football legends Ronaldo and Ronaldinho (little Ronaldo) are both involved in NFT projects
2️⃣ BTG Pactual and XP Investimentos - Latin America’s largest investment bank and one of its largest brokerages, respectively - are introducing new crypto products for the retail investor.
3️⃣ Mercado Bitcoin surpasses 3 million customers and does away with withdrawal fees
4️⃣ Binance is looking for a new Brazil country director
5️⃣ Ripio hauled in US$50m in Series B funding
6️⃣ Brazil’s self-proclaimed “SlumDoge Millionaire” is no longer a millionaire
7️⃣ Corinthians announced a new NFT partnership with Sorare just weeks after launching its own fan token and inking a sponsorship deal with Mercado Bitcoin
Before we dive into all of that I’d like to dive into Brazi’s economic situation.
The Banco Central do Brasil hiked its Selic benchmark interest rate last week by 100 basis points to 6.25%. The move is a continuation of its ongoing fight against inflation, which was up 10% in September year-over-year. It marks the first time since 2016 that the country has experienced double-digit inflation.
This 10% figure is significantly above the BCB’s 3.75% inflation target for 2021 and 3.5% target for 2022, though these year-end targets come with a 150 basis point margin for error in either directions. Among G20 countries, only Argentina and Turkey are currently experiencing higher inflation.
But the BCB is fighting back with arguably the most aggressive monetary tightening actions of any G20 central bank, as it looks to support the real and improve the country’s fiscal outlook. It’s widely expected that the Copom, or Comitê de Política Monetária (equivalent of the Federal Open Market Committee in the US), will hike rates again this year by at least another 175 basis points to 8% and potentially as high as 10%. It has already increased the Selic rate by 425 basis points since March.
A resulting slowdown in economic growth appears all but certain, as economists have lowered 2022 GDP growth projections from 2% to 1.6% in recent weeks (2021 growth is projected at 5% due to the post-covid rebound). Slower growth coupled with stubbornly high unemployment - 14% for the most of the past year and over 10% for the last six - have rekindled talk of a “Lost Decade” for the Brazilian economy after peaking in 2014 as an emerging market success story.
What does this all mean for crypto adoption in the country? It’s tough to say definitively. Less growth obviously means less wealth and less disposable income to invest in higher-risk assets like cryptocurrencies. However, there has never been a more ideal moment for the tech-savvy Brazilian population to “opt out” of the never-ending cycle of economic mismanagement via financial technology innovations like crypto. Hopefully there is a bright side to what could be trying times.
If you’re new here, the meta-thesis for this publication is that Brazil - with a population of 214 million and a US$1.8tn economy - is the most overlooked crypto market in the world. The objective is to highlight the important news and provide useful context for the estrangeiro (foreigner) English-speaking audience.
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Binance, the world’s largest cryptocurrency exchange, is hiring for a Brazil Director who will “play a vital role in all aspects of the business, from creating the best possible exchange through best in-field operations, to launching new product offerings in (the) country.” Responsibilities will include:
“Define and lead expansion plans for the market and shape the plan for launching new services while ensuring strong coordination with Government Relations, Marketing and Tech teams along the way.”
For Portuguese readers, CoinTelegraph Brasil has a handy run-down of different Brazil crypto related jobs here.
Exchanges and Funds
BTG Pactual is launching its own cryptocurrency investing arm. The investment bank, Latin America’s largest, will launch its Mynt platform later this year. It will enable customers to directly purchase bitcoin and ether. The bank will become the first major Brazilian financial institution to directly allow participation in crypto markets.
Andre Portilho, head of Digital Assets at BTG Pactual, said in a statement:
“Initially, we will feature the two primary assets in the market, but we will include other cryptos for trading over time. We will have a complete platform for blockchain-based assets.”
Ripio raised $50 million in a Series B funding round to expand its operations throughout Latin America. The round was led by Digital Currency Group and included Mercado Livre CEO Marcos Galperin. In January 2021, the Argentina-based exchange acquired BitcoinTrade - which at the time was the second-largest cryptocurrency exchange in the Brazilian market.
Sebastian Serrano, Ripio CEO and co-founder, said in a statement:
“This round is a natural step forward that allows us to continue building and expanding our products in the region, with the mission of broadening access to the crypto world, creating simple tools and offering quality educational resources for getting to know the crypto space.” (CoinDesk) (Exame) (Valor Investe) (The Block)
Uniswap is registering its trademark with Brazil’s intellectual property office. The request was made by Universal Navigation Inc, which is responsible for Uniswap Labs - which in turn oversees the development and operation of the Uniswap decentralized exchange. (CoinTelegraph Brasil)
XP Investimentos, one of the largest brokerages in Latin America, is opening up two crypto funds to Brazilian retail investors. The first fund will hold exclusively bitcoin. The second, called the Trend Cripto Dólar FIC FIM, will track the Nasdaq Crypto Index - a basket of cryptos that includes bitcoin, ether, Litecoin, Chainlink, Filecoin, Bitcoin Cash, Uniswap and Stellar. Both funds are open to the public with a minimum investment of R$100 and will charge an administration fee of 0.5% per year.
Danilo Gabriel, indexed fund manager at XP Asset, said:
“The crypto market has been growing significantly. There are currently more than 12,000 cryptoassets totaling a market value of US$1.9 trillion – double what all Brazilian companies listed on B3 are worth. Democratizing access to products that are at the forefront of technology and innovation is to offer investors what is most disruptive in this segment.” (CoinTelegraph Brasil) ( InfoMoney)
Mercado Bitcoin surpasses 3 million clients, removes withdrawal fees effective September 21. The eight year-old crypto exchange, Brazil’s largest, is permanently doing away with fees for withdrawals of at least R$100. The move comes after Mercado Bitcoin closed a US$200m funding round this past summer at a valuation of US$2.1bn.
Mercado Bitcoin’s director of new business Fabricio Tota explained:
“This is a very important milestone for us because it shows not only increasing interest in cryptocurrencies, but also growing trust in Mercado Bitcoin. We decided to eliminate the withdrawal fee to reward those who are on this walk with us.” (CoinTelegraph Brasil)
MB CEO Reinaldo Rabelo also announced on Linkedin that he is building a physical NFT gallery and that the exchange will be launching products that service this segment of the market. (CoinTelegraph Brasil)
Not to be outdone, Foxbit is also doing away with its withdrawal fees and will offer instant withdrawal services 24/7. Founded in 2014, the Brazilian exchange has approximately 800,00 users. Foxbit intends to list 10 more cryptoassets by the end of 2021, bring its total offering to 35. (Portal do Bitcoin)
The São Paulo Corinthians football club is entering into an NFT partnership with Sorare, the European fantasy soccer platform that recently raised US$680m at a US$4.3bn valuation. The club’s fans will be able collect, trade and play fantasy sports games with NFTs representing Corinthians players. The move aims to reinforce the club’s global presence, particularly in Asian and North American markets where it has a growing fan base. The announcement comes just weeks after the club launched its $SCCP fan token with Chiliz and Socios - which raised US$1.6m in just three hours, and inked a sponsorship deal with Mercado Bitcoin.
Corinthians president Duílio Monteiro Alves said in a statement:
“With Sorare, Corinthians is taking another step in the innovation of its global ambitions. In this partnership, we are going to offer, through fantasy games and NFTs, new ways of living the passion for Corinthians on a daily basis.” (CoinTelegraph Brasil)
Brazil’s Defense Minister Braga Netto has tasked the Brasilia firm GoLedger to explore blockchain solutions for national defense. An order published in the Federal Register authorized the company to build ‘strategic defense products,’ which are defined as goods, services and information that are “of strategic interest for national defense.” GoLedger uses Hyperledger frameworks to develop private and permissioned blockchains, according to its website. (CoinTelegraph Brasil)
Hathor becomes the first Brazilian cryptocurrency to integrate with the Ledger wallet. HTR, the native cryptocurrency of the Hathor Network - which was created by Brazilian developers - will now be able to kept in cold storage using the popular hardware device. Coins held in cold storage are disconnected from the virtual world and at less risk of being hacked or stolen. However, support for HTR on Ledger can only be installed when using the device on developer mode - meaning that several additional and more technical steps are required to set up the application. (CoinTelegraph Brasil)
After market correction, Brazil’s “SlumDoge Millionaire” is no longer a Dogecoin millionaire. Glauber Contessoto rose to crypto influencer status earlier this year after profiting massively on his $DOGE investments, but his fortunes have changed as the markets have corrected.
QR Capital’s QBCTC11 bitcoin exchanged traded fund is crushing the competition this year, posting 43% returns since launching in the spring. Meanwhile, 8 of the other 10 largest ETFs listed on the B3, Brazil’s largest stock exchange, are in the red as of September 23. (CoinTimes)
NFTs and Gaming
Brazilian football legend Ronaldo will soon be immortalized on the blockchain with his own exclusive NFTs. Why? Because why the heck not. The tokens will be launched as part of a Sorare initiative called Legendary XI that will bring the lives and careers of more than 50 iconic global football figures into the digital world via NFT. (CoinTelegraph Brasil)
Another Brazilian football legend, Ronaldinho (not to be confused with Ronaldo), threw his support behind an NFT art collective produced by Sthorm, a Sao Paulo-based blockchain laboratory and developer of the Theos.fi NFT platform. The collection, which is also supported by former Guns n’ Roses drummer Matt Sorum and the Global Blockchain Business Council, was presented at the United Nations General Assembly in New York City earlier this month. (CoinTelegraph Brasil)
Brazilian pop singer Anitta is showcased in a new Burger King NFT campaign. Customers who purchase Burger King’s “Keep it Real Meals” will receive a QR code that gives access to the promotional NFTs - which include 3D digital art, vouchers for free Whoppers for a year and autographed products. (Exame)
Brazil is a becoming hot market for blockchain gaming and NFTs, according to a new analysis by DappRadar.
Policy, Regulation and Law Enforcement
A proposed law to regulate cryptocurrencies will be presented to the Brazilian Senate in October. (CoinTelegraph Brasil)
Brazil’s banks are accusing Nubank of failing to lower its interest rates to account for inflation. Febraran, a trade group representing the banking industry, cried foul arguing that the average interest rate for Nubank credit cards was 291% per year for the last month of August, well above the market average of 272% for the country’s largest banks. (CoinTelegraph Brasil).
Glaidson Acácio dos Santos, operator of the alleged GAS Consultoria pyramid scheme and known as the “Faraó dos Bitcoins,” used offshore exchanges Binance, Bitfinex, Bittrex and Bitstamp to hide at least R$1.2bn (US$222m) in transaction activity from authorities. According to CoinTelegraph Brasil, these entities are not registered with the Receita Federal (Brazil’s tax authority) and don’t have the same AML reporting obligations as nationally-based exchanges. GAS had previously used Foxbit but was banned from the exchange in 2017 due to fraud suspicions.
Acácio dos Santos and 21 others involved in the GAS Consultoria scheme were formally indicted by Federal Police for crimes against the financial system. The indictments mark the next phase of the “Operation Kryptos” operation, which alleged GAS operated a bitcoin pyramid scheme in Rio de Janeiro that promised investors 10% return per month but wasn’t registered with any regulatory bodies. The police report alleges that more than R$17bn (US$3.19bn) moved through GAS in the 12 months prior to Acácio dos Santos’ arrest on August 25. (CoinTelegraph Brasil)
Rio de Janiero police arrested 13 gang members accused of laundering money with bitcoin. Dubbed Operation Blood Money, the arrests were carried out in the neighborhoods of Muzema and Rio das Pedras. (CoinTelegraph Brasil)
That’s all for this week! If you enjoyed this content, please share and subscribe!