🇧🇷 Brazil Crypto Report #18: Banco Central's Largest Rate Hike in 20 Years
👋 Greetings from Lisbon 🇵🇹 where I’ll be set up for the next week. It’s my ever visit to the ‘motherland’ and I’m thoroughly enjoying it even though the weather hasn’t been ideal. If you’re in town for Web Summit and/or the satellite events please ping me and we can try to meet up.
There are two big pieces of “crypto adjacent” news to touch on this week before we dive into the news recap.
1️⃣ The Banco Central enacted its largest interest rate hike in 20 years, increasing its benchmark Selic rate by 150 basis points to 7.75%. The hawkish move came after an attempt by the Bolsonaro government to bypass spending rules in order to boost welfare spending ahead of the 2022 presidential election, prompting four senior Treasury officials to resign in protest and a wave of sell pressure on the BRL from investors.
The hike also comes amid inflationary pressures that crept into the double digits in September and continue to worsen.
2️⃣ Brazilian fintech unicorn NuBank has filed to go public, with the intention of listing in the United States while negotiating a “program of Brazilian Depository Receipts” that would trade on Brazil’s B3 exchange.
The firm’s explosive growth has been nothing short of remarkable. It was founded in 2013 with backing from A-list venture capital firms like Sequoia Capital and offered zero-fee, mobile-managed credit cards. Now it now boasts 40m customer accounts across Brazil, Colombia and Mexico (just 25m in June 2020) - making it one of the largest digital banks in the world (if not THE largest). It has successfully captured 5.4% of the Brazilian retail credit card market and is molding itself into a fully-fledged financial institution, offering personal loans, investment products, savings accounts and insurance.
In June, NuBank raised a US$750m round at a US$30bn valuation, with Warren Buffet’s Berkshire Hathaway, Tiger Global Management, Tencent and Singapore’s sovereign wealth fund getting in on the act. The company recorded its first-ever profit, US$13.6m, for the first half of 2021.
The FT’s Michael Pooler wrote a nice backgrounder piece on NuBank’s meteoric rise if you’re interested in reading more.
What does this all mean for crypto? NuBank has already begun dabbling in bitcoin, and as it continues to grow its user base and product offerings it will almost certainly be a massive on-ramp for retail Brazilian investors into bitcoin and other cryptos.
Another interesting dynamic here is that NuBank is one of the main reasons Brazilians tend to view crypto as an investment play rather than a payments or financial inclusion one. Of course, crypto can do the latter, but because NuBank (along with PIX and other services) has been so successful at making financial services more accessible, “banking the unbanked” isn’t as acute of a need as it was a few years ago.
NuBank also figures to play a critical infrastructure and service provider role in the Digital Real project, which goes into testing next year and is expected to go live in 2024. Earlier this month, the company participated in a Banco Central workshop examining the mechanics of Digital Real issuance, burning, distribution and custody.
With that, I’d like to officially welcome you to 🇧🇷 Brazil Crypto Report #18 for the week of Oct 25-29, 2021. The news recap starts below the sponsor blurb.
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 is now hiring for 12 Brazil specific roles. In particular, four new payments risk analyst jobs have been posted, in addition to six engineering positions, a payments business development role and a technical recruiter.
Asset manager Hashdex has 14 roles open across its Brazil and New York offices.
Bitso is looking to fill six roles, including a business development lead, senior legal associate and communications lead for its Brazil operation.
For Portuguese readers, CoinTelegraph Brasil has a handy run-down of different Brazil crypto related jobs here.
🗞Brazil Crypto News Rundown 🗞
Brazilian fintech unicorn 99Pay announced that it will allow users to buy and sell bitcoin on its platform beginning November 3. Users will incur no trading fees, with a minimum transaction size of R$10 (US$1.70) and upper limit of R$10,000 (US$1,775). The fintech also announced this week that it will begin offering bitcoin cashback rewards to its users. (CoinTelegraph Brasil)
BitcoinTrade listed RipioCoin (RPC), its parent company Ripio’s official token. Users can earn RPC by completing different “missions” and tasks on the platform, and holding RPC will entitle users to discounts on trading fees (Similar to how the BNB token works on Binance). Henrique Teixeira, Brazil country manager at Grupo Ripio, commented:
“Now with all the synergies integrated, the brands are united and strong. RPC is the hallmark of this innovative union, which will bring great fruit to the Brazilian market.” (CoinTelegraph Brasil)
2TM, the parent company of Mercado Bitcoin, acquired a batch of Fingerprints DAO tokens. Fingerprints is a decentralized autonomous organization that curates digital art via a blockchain platform. It owns one of the largest collections of Autoglyphs - an NFT series minted by the same creators as CryptoPunks, in the world. (CoinTelegraph Brasil)
Andre Esteves, the billionaire ex-president of BTG Pactual, told clients that he is “not a fan” of bitcoin at US$66,000, but signaled that he’s bullish on decentralized finance. He made the remarks in a private meeting for clients, but his remarks were leaked shortly after.
“Does bitcoin have value at this price!? I am not a fan. If anyone wants to do something here I would recommend a small portion of the equity to test, understand and learn, and not use leverage.”
When asked about his views on cryptocurrencies, Esteves added:
“This is a topic that we discuss a lot. I actually have a meeting tomorrow about crypto in Brazil. I am very attracted to the ecosystem that will come together around cryptocurrencies, this world of blockchain and decentralized finance. In the coming decade, the way that we will interact, financially speaking, will change completely in line with these technologies.” (Portal do Bitcoin)
Traders Club announced that it will allow crypto trading on its platform this year. The news comes just weeks after the firm invested in 2TM, the parent company of Mercado Bitcoin. (CoinTelegraph Brasil)
Foxbit launches Foxbit Pay service, allowing companies and online merchants to receive payment in 17 different cryptocurrencies. Foxbit Co-CEO Ricardo Dantas explained:
“We realized that with the growth of the cryptocurrency market this year, many companies started looking to us for a solution to receive their payments in bitcoin or other cryptocurrencies. Foxbit Pay was developed to serve these companies and diversify the means of payment, beyond traditional currencies.” (CoinTelegraph Brasil)
MC02 token surged 20% on news of a new partnership with data provider Amber Group. The carbon credit-backed cryptocurrency is issued by the Brazil-based project MOSS. Amber purchased 250,000 tons of carbon offset via MC02 tokens, enough to offset roughly 280,000 Bitcoin transactions. Amber Group founder and CEO Michael Wu explained:
“Climate change is the central question of our time. Joining forces with Moss Earth will constitute an important pillar in our ambition toward a carbon neutral commercial impact and a path towards long-term negative carbon promise.” (CoinTelegraph Brasil)
Blockchain firm Finchain is launched a new wallet called Coins, aimed at simplifying crypto transacting and investing for the Brazilian consumer. According to the company, Coins is an all-in-one wallet that offers trading for 20 cryptocurrencies and seeks to lower barriers to entry for investors. Coins CEO Marcelo Miranda explained that the wallet provides:
“A very easy way to buy and sell cryptocurrencies for those who don’t have time to learn about trading and want something practical and fast.” (Portal do Bitcoin)
Bitcoin, ether and Dogecoin have been Brazilians’ preferred cryptocurrency purchases in 2021, according to data from Passfolio - a platform that connects Brazilian investors to American markets. Amp (AMP), Litecoin (LTC), Chainlink (LINK), bitcoin cash (BCH), Decentraland (MANA), ZCash (ZEC) and Uniswap (UNI) rounded out the top 10 most popular cryptos. (Money Times)
Bitcoin and cryptocurrency purchases are being blamed for driving the BRL’s devaluation against the US dollar as Brazilians have purchased US$12bn in crypto since 2018, said Bruno Serra, director of monetary policy at Brazil’s Banco Central. (CoinTelegraph Brasil)
Coritiba Football Club launched its fan token in partnership with asset tokenization platform Liqi, making 33,700 tokens available for a purchase price of R$25 (US$4.40). The Coritiba token is unique as it gives investors access to potential financial returns via a cut of revenues earned by the club via FIFA’s Solidarity Mechanism - a fee paid to the original training club whenever a player switches teams. (CoinTelegraph Brasil)
Roughly 220,000 Brazilians are trading cryptocurrencies each month, according to Receita Federal - Brazil’s tax authority. That number peaked in April 2021, when 617,000 individuals traded, according to data provided by exchanges. Jonathan José Formiga de Oliveira, an auditor at RF, told Brazil’s Chamber of Deputies that cryptocurrency trading volume in the country has doubled in the last year.
“It is a very strong volume, which reveals that Brazilians are increasingly believing and seeing cryptoassets as a natural asset, regardless of having regulation in the financial system. It is a legal, legitimate asset and they are investing.” (CoinTelegraph Brasil)
59% percent of Brazilians who have not yet purchased cryptocurrencies are likely to do so in the next 12 months, per a survey of 2,000 individuals commissioned by Crypto.com. Reasons cited for not yet having made such purchases include: 1) the need to better understand how to make these purchases (62%), 2) lack of information about the technology (53%) and 3) a desire to be able to withdraw their investment in paper money with a card at an ATM machine.
40% of respondents indicated they had made a crypto purchase in the past year. Motives for making those purchases included 1) an alternative investment opportunity (66%), 2) a hedge against economic instability (33%) and 3) as a way to protect assets from government interference (25%). Among this group, 46% plan to invest in a cryptocurrency investment fund or ETF in the coming year, while 54% plan to invest directly into currencies like bitcoin or ether. (CoinTelegraph Brasil)
Cervejaria Dogma, the popular São Paulo brewery, will begin accepting bitcoin as a means of payment. (Money Times)
São Paulo Football Club delayed the launch of $SPFC, its official ‘fan token’, until November 9 due to “great interest”. The release was originally scheduled for November 3, via a partnership with Socios.com that makes the platform an official SPFC sponsor. (CoinTelegraph Brasil)
🎮 NFTs and Gaming
Brazilian NFT minting platform DropGen launched its first digital art collection, selling 10,000 pieces created by North American artist Alex Solis - bringing in R$10m (US$1.8m). (CoinTelegraph Brasil)
The Banco Central is exploring an integration with Visa for offline payments within the Digital Real platform. Fábio Araújo, who directs the Digital Real project at BC, made the revelation during a Chamber of Deputies hearing this week. (CoinTelegraph Brasil)
🏛 Policy, Regulation and Law Enforcement
A cryptocurrency investing scheme run by the boyfriend of Brazilian pop singer Perlla is being hit with complaints from investors unable to access their funds. Trust Investing, run by Patrick Abrahão, promises 20% monthly returns and as much as 500% annual returns. After Abrahão flexed the purchase of his new BMW X6 on social media, worth R$1m (US$177k), investors began to complain about missing funds and poor usability. (CoinTelegraph Brasil) (Extra)
A hearing in the Chamber of Deputies, convened by Federal Deputy Aureo Ribeiro, examined the growing incidence of cryptocurrency pyramid schemes and frauds around the country - most notably the GAS Consultoria incident from last summer. (CoinTelegraph Brasil)
“Pharaoh of Bitcoins” Glaidson Acácio dos Santos was indicted by Civil Police for having orchestrated an attempted murder against a competing cryptocurrency investment operator in Cabo Frio. Glaidson, who operator the GAS Consultoria pyramid scheme before being arrested in August, is alleged to have ordered a hit on Nilson Alves da Silva (aka ‘Nilsinho’) in March of this year, when a group of hooded men shot Nilsinho as he was driving in his BMW X6. Nilsinho survived the incident but was left blind and quadriplegic. (Folha de S. Paulo)
Federal Highway Police apprehended $38,000 worth of Bitmain Antminers during a traffic stop outside of Rio de Janeiro due to the driver not possessing an invoice for the hardware. The driver confirmed to the police that he had purchased the miners from two individuals in Ciudad del Este, Paraguay. (Portal do Bitcoin)
A Brazilian court has denied “Bitcoin King” Claudio Oliveira’s petition for habeas corpus. Oliveira operated Grupo Banco Bitcoin before being arrested in July for allegedly running a criminal operation out of Curitiba resulting in the theft of US$266m from 7,000 customers. He now faces charges for embezzlement, organized crime, crimes against the financial system and bankruptcy crimes. (Portal do Bitcoin)
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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