🇧🇷 Brazil Crypto Report #21: 10 Million Users 🚀
👋 Hello everyone and welcome to 🇧🇷 Brazil Crypto Report for the week of November 15-19.
Lots of news this week, per usual, but first I wanted to touch on LaBitConf 2021, which was held in El Salvador last week. LaBitConf is the largest bitcoin conference in Latin America and is held in a different location each year. For obvious reasons, this year’s event was held in El Salvador, and I had the privilege of helping Rodolfo Andragnes, the organizer, with some of the planning and ideation behind it.
🌋 The big news out of the event was President Nayib Bukele announcing plans to build a “Bitcoin City” funded by the issuance of US$1bn worth of bitcoin-backed “volcano bonds”.
💣 It’s hard to shake the feeling that this conference was a watershed event for crypto adoption across Brazil and Latin America. These technologies, the values built into them and the narratives and momentum they create are permeating the public consciousness. All told, it’s an extremely exciting time to be involved in the Latin America crypto scene.
🚀 In a series of write ups for Exame, LaBitConf speaker Camila Rioja of cLabs Brasil highlighted the event’s emphasis on bitcoin as a tool for monetary and economic freedom, the opportunity for nation states like El Salvador to benefit by embracing technology and other use cases like NFTs and gaming.
🚨Also, friendly reminder to please fill out a quick 3 minute reader survey. I’m working through how best to further scale this project and would like as much reader input as possible to factor into these decisions!
Até mais,
Aaron
🙏 Special thanks to Celo Community Fund for supporting Brazil Crypto Report!
👩💻Brazil Crypto Hiring Spotlight
Hashdex is looking to fill 18 roles across its offices in Rio de Janeiro and New York City. These include a variety of technical and engineering positions, internships and research, compliance and investor relations jobs.
For Portuguese readers, CoinTelegraph Brasil has a handy run-down of different Brazil crypto related jobs here.
🗞Brazil Crypto News Rundown 🗞
📈 Markets
Brazil is the fifth largest crypto market in the world with 10 million users - roughly 5 percent of the population, per a study commissioned by Binance and TripleA. At this size, the number of crypto investors in the country is more than double the number of individual accounts on Brazil’s B3 stock exchange, which recently eclipsed 4 million. (Livecoins)
Mercado Bitcoin CEO Reinaldo Rabelo pushed back against criticisms leveled by B3 CEO Gilson Finkelsztain earlier this month in an interview with Seu Dinheiro that Brazilian crypto exchanges operate without regulation and take advantage of customers through hefty fees. The comments unsurprisingly generated strong reaction from the Brazil crypto industry, most notably Rabelo who worked at B3 for 10 years before becoming CEO of Brazil’s first unicorn crypto exchange.
Rabelo specifically pointed to anti-money laundering, tax reporting and data protection rules that Brazilian exchanges must follow, even though the exact regulating bodies differ because cryptocurrencies are being treated as commodities rather than:
“There isn’t any service in Brazil that is free from regulation, including Mercado Bitcoin. Any person or company that decides to provide services for another person will be subject to rules, even general ones, both of contract and civil relationship, as well as limitations related to the control and prevention of money laundering.”
Rabelo also lobbed several criticisms directly back at Finkelsztain and B3, asserting that the exchange extracts numerous hidden fees from customers and that Finkelsztain’s take is hypocritical because B3 currently lists five cryptocurrency ETFs:
“If someone says 'the exchanges are unregulated and this is dangerous', then why does B3 have a bitcoin ETF? That bitcoin is not regulated by the CVM (Brazilian Securities and Exchange Commission) or the Central Bank, but the company that offers that fund is.” (Seu Dinheiro)
Users of the 99 fintech app can now purchase bitcoin directly and earn cashback through the 99Pay wallet via a new partnership with Foxbit, a crypto exchange with 800k users in Brazil. 99 will deploy Compra Fácil, Foxbit’s “crypto-as-a-service” platform that allows banks and financial entities to offer all of the services and functionalities of the Foxbit exchange. Foxbit co-CEO João Canhada explained:
“Our mission is to reduce the bureaucracy inherent in accessing cryptocurrency markets. Thus, we provide a solution for other businesses to introduce their customers to the world. With easy integration, our platform allows other partners’ customers to buy and sell bitcoins and other cryptoassets, in addition to monitoring asset balances and quotes.” (CoinTelegraph Brasil) (Portal do Bitcoin)
Brazilian investors are now looking to cryptocurrencies more than equities when making investment decisions, according to a new survey of 300 investors by Brunswick Insight. 39% of respondents said they invest in cryptocurrencies compared to 28% who said they invest in equities. 44% of investors under 30 years of age indicated they currently invest in crypto. Fixed income remains the most popular asset class, with 71% of investors participating. (Valor Investe)
CloudWalk announced a new valuation of US$2.15bn after a US$150m fundraising round led by Coatue and with participation from Valor Capital Group, DST Global, A-Star, The Hive Brazil and Plug and Play Ventures. The Brazilian fintech firm, which incorporates blockchain and artificial intelligence into its platform, says it processes more than US$2.4bn worth of transactions annually. CloudWalk CEO Luis Silva said in a statement:
“As the global payments market rapidly evolves, we believe that blockchain will soon become the dominant source for all future payment processes.” (Reuters)
$SPFC, the native ‘fan token’ of São Paulo Futeball Club, began trading on November 16 on Mercado Bitcoin. (CoinTelegraph Brasil)
Brazilians have parked R$5.6bn (US$998m) into investment products offering exposure to bitcoin and other cryptocurrencies, such as multimarket funds and ETFs traded on the B3 stock exchange. The largest portion of this, R$4.9bn is in multimarket funds offered by asset managers like Hashdex and Vitreo.
Mercado Bitcoin listed Dogecoin for trading on Thursday. Currently, the coin is only available for buying and selling on the platform; deposits and withdrawals will be enabled at a non-disclosed date in the future.(CoinTelegraph Brasil) (InfoMoney)
Traders Club announced the acquisition of CriptoHub, a Brazilian exchange, for R$937m (US$166m) to form a new crypto trading platform called TC Cripto. The move comes just weeks after Traders Club, which offers a Robinhood-esque investment platform, announced a US$15m stake in 2TM - the holding company that owns Mercado Bitcoin. (Valor Investe)
B3 Exchange reported that open interest on cryptocurrency-linked derivatives contracts at the close of October stood at R$777m (US$138m), with approximately 6,000 open contracts. Individual investors made up 88% of this volume, while investment funds comprised the remainder.
In August, B3 began allowing over-the-counter offerings derivatives products that reference other crypto products traded on the exchange, such as the crypto ETFs offered by Hashdex and QR Capital. The motive was to give investors a regulated way to protect themselves from market volatility while protecting them from products with non-transparent reference rates. (Valor Investe)
Parfin announced a new partnership with Denmark-based Sepior to offer crypto custody based on multi-party computing cryptography. The custody solution will be available in either a SaaS or fully-integrated format, targeting banks, investment managers, institutional investors and crypto exchanges. The multiparty computing functionality distributes and stores the private key in a more secure and decentralized manner. Parfin CEO Marcos Viriato commented:
“There are few providers in the world for an MPC wallet. We have seen a great demand for this solution, and few companies capable of offering quality service. With this partnership, we stand out as the only player in Latin America able to offer this technology.
The goal is to provide a world-class, highly secure and efficient escrow solution for digital assets, including cryptocurrencies, tokens, NFTs, central bank digital currencies and other asset types.” (CoinTelegraph Brasil)
🚀Adoption
Brazil surpassed Argentina in October to become the third largest originator of traffic to Binance, the world’s largest crypto exchange. (Livecoins)
PIX, the Banco Central’s instant payment system, onboarded 110m users and processed R$550bn (US$98bn) in its first full year. BC data showed that PIX comprised 13% of all payments in the country for the second quarter. 63% of Brazilians who have bank accounts are registered with PIX, as well as 55% of companies that have existing banking relationships - including many cryptocurrency exchanges. (CoinTelegraph Brasil)
Brazilian crypto startup Liqi is paying its employees a 3% monthly bonus in bitcoin. (CoinTelegraph Brasil)
CoinPayments looks to bring crypto payments to 500,000 businesses in Brazil through a new retail-focused partnership with Shipay, a fintech. Rubens Neistein, business manager at CoinPayments, said:
“This is a first step toward allowing retail to also partake in the security and agility of cryptocurrencies, while even more popularizing this asset not just as an investment vehicle but also to be used as a payment method when making purchases.” (CoinTelegraph Brasil)
Street vendors affiliated with fintech unicorn 99 are selling bitcoin to passerby on Ipanema Beach in Rio de Janeiro (CoinTelegraph Brasil)
CoinTelegraph Brasil editor Cassio Gusson tells a harrowing personal story about his travels to Russia to seek medical treatment for his daughter who had developed cerebral palsy. Sending payment to the clinic in Russia via a traditional bank transfer through Banco do Brasil proved to be a string of endless headaches, but paying using bitcoin by way of his Z.Ro Bank credit card proved to be simple and instantaneous. (CoinTelegraph Brasil)
Fábio Faria, Brazil’s minster of communications, met with Elon Musk to discuss a potential partnership between SpaceX, Starlink and the Brazilian government. The two discussed the use of technology in monitoring deforestation and fires in the Amazon, as well as internet connectivity projects for rural areas. Musk commented about the meeting in a statement:
“People in Brazil who have difficulty connecting to the internet, this is an opportunity to be celebrated. We are eager to be able to provide connectivity for the less connected.” (CoinTelegraph Brasil)
Cultecoin distributed R$140k (US$25k) of tokens to rural farmers as part of a pre-sale that raised US$400k. The “agrocoin” project is an initiative of Culte, a company that helps small producers with financial services and accessing credit, while reducing intermediaries in the supply chain. Cultecoin is a BEP-20 token native to Binance Smart Chain that will facilitate payments for fees, products and services in the Culte marketplace. (CoinTelegraph Brasil)
Educbank, a Brazilian fintech focused education, launched a scheme enabling users to make tuition payments in cryptocurrency at 60 different schools. By integrating crypto into its payment system, the company, which provides technology and financial solutions to private schools, will allow schools throughout Brazil to receive payments on a monthly basis in bitcoin and other cryptocurrencies. It will give consumers another option when making tuition payments beyond antiquated “boletos” or bank slips. Educbank Lars Janér explained:
“We know that the vast majority of Brazilian schools are still hostages to the 'good old' bank slip. Dissatisfied with this scenario, we want to transform educational institutions at the forefront when it comes to financial innovations.” (CoinTelegraph Brasil) (Valor Investe)
Photo credit: Valor Investe
Mercado Bitcoin users who hold Vasco tokens will receive a payout related to a player transaction for the third time this year. Allan Loureiro, a midfielder who plays for Everton Football Club in the English Premier League, triggered a bonus in his contract for reaching certain performance indicators. As the club that trained Loureiro, the Vasco da Gama club receives a portion of the payout under the FIFA Solidarity Mechanism. A portion of this sum, R$158k (US$28k) will be distributed to Vasco token holders - approximately R$0.32 per token. Vasco CEO Luiz Mello commented:
“This year alone, this is the third payment made through the tokenization of the solidarity mechanism that we have carried out with Mercado Bitcoin, with which Vasco was one of the pioneers in understanding the dynamics and opening the way for the profitability of our assets with the partners.” (CoinTelegraph Brasil) (Portal do Bitcoin)
The state of Pernambuco is considering requiring instruction in blockchain technology for students. (Livecoins)
FIFA, the global football governing body, is looking to use a new blockchain-based registry system in Brazil that would allow users to manage digital collectibles, according to an application filed with National Institute of Intellectual Property. (Livecoins)
🎮 NFTs and Gaming
Brazilian-American skateboarding legend Bob Burnquist is supporting PowerJags, an NFT project to support the preservation of jaguars in the amazon. The collection of jaguar-themed NFTs will launch on OpenSea on November 29. 40% of the profits will go to non-profits working to preserve the species. (CoinTelegraph Brasil)
The Brazilian Series of Poker will award an NFT trophy to the winner of its tournament, which begins November 24. Devanir Campos, director of BSOP, explained:
"The BSOP has always been attentive to news and trends in the market. We believe that NFTs are not just a fad and can even change the way we deal with unique and exclusive items, such as a champion's trophy. That's why we want to be the first to be bring our champions closer to this fascinating new world created by blockchain technology” (Exame)
Cannabis-themed NFTs are coming to Brazil through a new partnership between Seeding Brasil and NFTrend. Seeding Brasil will look to raise R$625k (US$111k) through the issuance of 2,500 NFTs priced at R$250 each beginning November 20. (CoinTelegraph Brasil)
🏛 Policy, Regulation and Law Enforcement
A former client of assassinated trader and investor Wesley Pessano is seeking R$170,000 (US$30,000) from his estate. The client, a recently graduated engineer from Mato Grosso, followed Pessano on social media, took his courses on cryptocurrency trading and traveled to Cabo Frio to invest in Pessano’s scheme that promised 10% return per month. The engineer allegedly borrowed money from his mother’s pension to make the investment. The 19 year-old Pessano, who had become renowned for flaunting his crypto wealth, was shot and killed in his Porsche outside Cabo Frio in August. (O Globo)
A Banco Central official re-affirmed the bank’s concern over Brazilian investors’ exposure to crypto assets and the associated volatility. Fernanda Guardado, Director of International Affairs and Corporate Risk Management at the Banco Central, made the remarks during a webinar hosted by the Association of Banks of the State of Rio de Janeiro.
“There is some concern about the impacts that the volatility of these assets can bring in light of a very large demand, a very large advance within fund balances, and portfolios and banks over time - not now.” (CoinTelegraph Brasil)
El Salvador’s decision to make bitcoin legal tender means that the cryptocurrency could potentially be deemed a foreign currency in Brazil, meaning that bitcoin transactions would be subject to the IOF - a tax on financial operations. (CoinTelegraph Brasil)
A pair of lawmakers in Rio de Janeiro state have introduced legislation that would require cryptocurrency companies to provide the state government a comprehensive report on their financial activities and activities of their customers. The proposed bill comes as state governments around the country grow impatient as the Congresso Nacional has yet to pass a cryptocurrency regulation framework. The state of Rio de Janeiro has also become an epicenter of cryptocurrency scams and pyramid schemes, prompting cries to action from authorities. (CoinTelegraph Brasil) (Livecoins)
“Bitcoin King” Claudio Oliveira carried out several scams in Portugal before founding Grupo Bitcoin Brasil and subsequently being arrested, according to Visão, a Portuguese news magazine. Per the report, Oliveira claimed to have a degree in Financial Engineering from Harvard and to be an heir of a wealthy banker. Under these auspices, he involved himself in numerous criminal operations before fleeing to Switzerland with false documents in 2007. He then spent time in other European countries, the US and then Brazil before being arrested in July 2021. (CoinTelegraph Brasil) (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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