🇧🇷 Brazil Crypto Report #17: ETF Fever Pitch
👋 Welcome to 🇧🇷 Brazil Crypto Report #17 for the week of Oct 18-22, 2021.
Bitcoin (futures) ETF fever is sweeping the crypto world after the US Securities and Exchange Commission finally approved the instrument after eight years of rejections.
So before we dive into the news recap, it seems like a good time to look at how the five crypto ETFs currently trading in Brazil have fared since being green-lit earlier this year.
TLDR is that the numbers are quite impressive. Of 479,000 total ETF shareholders in the Brazilian market, 34% of them are invested in a crypto ETF. This comes even though crypto ETFs make up just around 10% of all the ETFs currently trading (48 total in Brazil).
Breaking out the numbers by individual fund, we get the following figures (courtesy of Exame):
HASH11 - 127,351 investors. Hash11 is managed by Hashdex and tracks a basket of cryptos including BTC, ETH, LINK, LTC, FIL and more.
QBTC11 - 22,575 investors. It’s managed by QR Capital and is 100% exposed to BTC.
QETH11 - 7,465 investors. Managed by QR Capital with 100% exposure to ETH.
BITH11 - 4,829 investors. Managed by Hashdex; 100% exposure to BTC; seeks to be world’s first “green” bitcoin ETF.
ETHE11 - 4,049 investors. Managed by Hashdex; 100% exposure to ETH.
📺 Elsewhere, Hashdex made a splash last week with a new marketing and education campaign featuring esteemed Brazilian journalist Pedro Bial. Bial has covered a host of important world events - including the reunification of Germany - for the Brazilian audience, and is known for hosting the popular news magazine show Fantástico and Big Brother Brasil.
The campaign kicked off with an ad featuring Bial during Fantástico discussing the promise and importance of crypto assets. It also features a new partnership with the privacy-focused Brave web browser. Brave will feature content from Hashdex and Bial on its landing page and will be visible to users when they open a new tab or window.
If you’re interested in learning more about Hashdex, Infomoney published an excellent backgrounder profile (in Portuguese) on the asset manager and its CEO Marcelo Sampaio.
🌎 Later this week, I’m going to send out a special edition breaking down some of the Brazil-related findings from Chainalysis’s new Geography of Cryptocurrency report. Until then, keep scrolling to catch the news recap for this week.
As always, thanks for reading.
🎉 Obrigado to Our Partner Non-Fungible Brasil
The team recently launched its Eu Ajudo o Pantanal NFT series with an eye for promoting and preserving the Pantanal - the world’s largest tropical wetland located in southwestern Brazil. The photography for this project is absolutely beautiful and showcases the region’s biological diversity. All NFT sale proceeds will go to SOS Pantanal, a non-profit devoted to preserving one of the world’s environmental treasures.
Be sure to visit the Eu Ajudo o Pantanal marketplace on OpenSea before scrolling further!
👩💻Brazil Crypto Hiring Spotlight
Coinbase now has eight job openings specific to Brazil - six engineering positions, a business development manager for payments role, and a technical recruiter.
Asset tokenization platform Liqi has hired Rita Casolato as chief compliance officer. Since 2017 she had overseen the fraud prevention department at Banco BV, Brazil’s seventh largest bank. (Portal do Bitcoin)
For Portuguese readers, CoinTelegraph Brasil has a handy run-down of different Brazil crypto related jobs here.
🗞Brazil Crypto News Rundown 🗞
Brazilians have already acquired US$4.3bn worth of cryptocurrencies in 2021, the Banco Central disclosed. Investors in the country now hold an approximate total of US$50bn worth of digital assets. (CoinDesk)
Bitcoin futures ETFs in the US are an important milestone, but have glaring inefficiencies for investors, argued Bruno Ramos de Souza, legal and compliance director at Hashdex - the Brazilian crypto asset and ETF manager:
“These futures ETFs do not track bitcoin price fluctuations well because the contracts have maturities, there is an update cost as they mature and new positions need to be built. This variation is estimated to be between 10-15% of the total bitcoin variation; it is not an ideal instrument.” (Valor Investe)
Kinea Investments, one of the largest asset managers in Brazil, has begun investing in cryptocurrencies. It’s believed to be the first such firm of its size in Brazil - with US$1bn in AUM - to begin allocations to the asset class. Marco Aurélio Freire, a partner and director at the firm, told Folha de S. Paulo that he began making “experimental” purchases of ether two months ago, adding:
“I see cryptocurrencies as a secular trend that’s worth having exposure to.” (CoinTelegraph Brasil)
Chinese crypto exchange Coinbene, one of the first foreign exchanges to service the Brazilian market, is closing down its operations in the country at the end of November after first launching in April 2018. It cited heightened restrictions on crypto trading and operating in China, where most of its team is based, as its primary motivation for the closure. Such restrictions are preventing the exchange from offering high quality services to Brazilian customers. In a statement, the company said:
"If we cannot provide quality services, we prefer to stop. Here, we decided to discontinue the operation of the local Brazilian team, including customer service in Portuguese and deposit and withdrawal in BRL." (CoinTelegraph Brasil)
Banco do Brasil clients will soon be able to exchange debit and credit card rewards points for bitcoin via a new partnership with Dotz and Foxbit. It marks the first such arrangement in Brazil that allows consumers to trade loyalty points for cryptocurrencies. (CoinTelegraph Brasil)
Crypto asset manager QR Capital has surpassed R$1bn (US$176m) in assets under management. The firm brought to market the first crypto fund for accredited investors in Latin America, the first 100% bitcoin and DeFi funds, as well as the first bitcoin and ether ETFs. Alexandre Ludolf, director of investments at QR Capital, said:
“We are very happy to reach this mark. This only motivates us to continue doing good work. The crypto asset market is without a doubt maturing before our eyes in Brazil, with the entrance of more individual and institutional investors each day.” (CoinTelegraph Brasil)
Brazilian investment into cryptocurrencies continues to draw the attention of the Banco Central, with inflows up 145% year-over-year, as the International Monetary Fund warns emerging market countries to pay closer attention to such capital inflows because of their volatility. Bruno Serra, director of monetary policy at the Banco Central explained:
“I think this dynamic of diversification (into cryptocurrencies abroad) is a dynamic that has come to stay. The channels for diversification have opened up a lot. Exchange regulation is moving towards flexibility in this sense, it is something that we have to deal with.” (Infomoney)
Zro Bank, the first bank in Brazil to facilitate accounts in both BRL and bitcoin, raised R$25m (US$4.5m) in a funding round. (CoinTelegraph Brasil)
BRZ, a stablecoin pegged to the BRL - is now available on Crypto.com, which is one of the largest crypto exchanges in the world with more than 10 million users. (CoinTelegraph Brasil)
Brazil’s stock market has been the worst performing of any major world economy thus far in 2021, with the Ibovespa index down nearly 7% since January. (CoinTelegraph Brasil)
Hong Kong-based crypto exchange and liquidity provider OSL is now accepting professional and institutional investors in Brazil. (Crypto Times)
Brazilians have already invested more than US$100k in the just launched BITO bitcoin futures ETF in the US. The product, and other US investments, are available through certain platforms such as Stake and Passfolio Securities. Stake founder and CEO Matt Leibowitz commented:
“The volume shows that the bitcoin ETF was the most popular debut to-date on the Stake platform. The enthusiasm for investments linked to bitcoin has been growing fast in recent years and shows that investors are looking for ways to diversify their portfolios and staying ahead of new technologies.” (CoinTelegraph Brasil)
Santos Football Club is working with Mercado Bitcoin to tokenize rights to players trained by the team. Working with MB Digital Assets, the tokenization arm of Mercado Bitcoin, Santos will release a token called Token da Vila based on FIFA’s solidarity mechanism. Fans can purchase the token for R$50, thereby helping the club with its financial restructuring and investing in a basket of rights to current and former Santos players like Neymar and Gabigol. (CoinTelegraph Brasil) (Valor Investe)
79% of Brazilians like the idea of doing away with cash and coins, and 93% would likely use a Digital Real, according to a new survey by PayPal of 4,000 consumers across the US, Brazil, China and Germany.
Leonardo Sertã, head of market development for PayPal in Latin America commented: “It’s important to highlight the influence of local context. We are seeing high enthusiasm for PIX, that may have positively influenced the perception around digitization, leaving the population more open to and interested in a cryptocurrency from a central bank.” (CoinTelegraph Brasil)
Flamengo Football Club sold 1.5m $MENGO tokens in two hours in its ‘fan token offering’, held on the Socios platform on October 19. A new tranche will be released to the public on October 26. (CoinTelegraph Brasil)
Public notaries in Brazil are adopting blockchain for authenticating records and signatures. (CoinTelegraph Brasil)
An anticorruption tool to trace public sector expenditures is being developed on bitcoin using the Lightning Network. The service is being developed by Investtools, by way of Blockchain Studio. It will feature its native GOV token, which will index expenditures made by government agencies and track them in a transparent, auditable and immutable manner. (CoinTelegraph Brasil)
A new token GASBitcoin has been created on Binance Smart Chain to “pay homage” to GAS Consultoria founder Glaidson Acacio dos Santos. Glaidson was arrested by Federal Police in August for allegedly running a cryptocurrency pyramid scheme. In related news, Glaidson has reportedly asked that his nickname be amended from “Pharoah of Bitcoins” to “Moses of Bitcoins”. (CoinTelegraph Brasil)
🎮 NFTs and Gaming
The CEO of InspireIP, Latin America’s largest NFT marketplace, is bullish on the future of NFTs in Brazil as the public gains a broader understanding of these assets. Caroline Nunes told CoinTelegraph Brasil in an interview:
“It is a market that shows promise, but is still in its infancy. We see an interesting movement in the primary market, but little or no movement in the secondary market, showing that NFTs have not yet "turned" in Brazil.
However, we also see that Brazil is one of the countries that most participates in NFT (play to earn) gaming communities, such as Axie Infinity and Star Atlas. I believe that in a year from now we will be able to see better how Brazil fits into the NFTs market.”
Brazilian tokenization marketplace ImovelWeb is making a play to tokenize real estate and portions of the Amazon rain forest. (Valor Investe)
Guilherme Samaia became the first Brazilian Formula One race car driver to create his own NFT line, and the second in the world. Japanese driver Ai Miura launched his own series five days before Samaia. (CoinTelegraph Brasil)
Brazilian supermodel Isabeli Fontana is now the ‘godmother’ of PowerJags, an NFT digital art project devoted to environmental protection. (CoinTelegraph Brasil)I'm thrilled to announce that website is now officially up and running. powerjags.io 🐾 10,000 NFTs with 40% going to my girls at Don´t forget about our discord AMA tonight 11:59pm UTC. I'll be there 👀
🏛 Policy, Regulation and Law Enforcement
The Banco Central is looking to modify rules governing pre-paid debit cards, including cards that can be loaded with bitcoin, such as Z.Ro, Uzzo, Zefi, Alter and others. The change seeks to harmonize the rules on interchange fees and terms of settlement for pre-paid cards with standard debit cards. (CoinTelegraph Brasil)
Deputado Aureo Ribeiro is urging the Brazilian Congress to expedite a vote on his bill to regulate cryptocurrency exchanges. The bill passed out of the committee level in September but has yet to receive a floor vote. The controversial bill would provide a degree of clarity to cryptocurrency exchanges and businesses while cracking down on frauds and pyramid schemes by giving the Banco Central and CVM (Brazilian securities regulator) more authority to regulate crypto investment and trading activities - thereby bringing more confidence and protection to retail investors. (CoinTelegraph Brasil)
Nubank director Bruno Magrani raised the question of whether decentralized finance has the power to take down the traditional financial system at a forum on the Digital Real convened by the Banco Central.
“What we are seeing with cryptocurrencies, in a general sense, is one of these moments. The question to ask is this: what does this mean for all of us in the financial sector? Will DeFi be a wave of creative destruction that will affect the banking system? Or will the traditional financial system be able to absorb this wave of innovation and reinvent itself stay relevant?”
Nubank, along with Febraran - a trade association representing Brazil’s largest banks, was invited to discuss issuance, burning, distribution and custody for the Digital Real, which will begin testing next year. It was the fifth such open event on the CBDC hosted by the Banco Central this year. (Yahoo Finance)
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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