🇧🇷 Brazil Crypto Report #23: Bear Market Edition ☠️
👋 Hello everyone and welcome to 🇧🇷 Brazil Crypto Report for the week of November 29 - December 3, 2021
If you’re anything like me, you probably woke up this weekend to find your crypto portfolio in a sea of red. It’s an emotional rollercoaster for sure, but it’s important to remember that growing pains will come and go in an industry like this. At the end of the day, it’s impossible not to be bullish on this sector when you’re in the trenches day in and day out - irrespective of day-to-day price movements.
Before we dive into the news this week, I’d like to add an addendum to one of last week’s big stories. Last week we covered the news that MercadoPago (the popular payments app affiliated with the Latin American e-commerce giant Mercado Livre) is allowing its 28 million Brazilian users to buy, sell and hold crypto.
Crypto news site The Block (not to be confused with Block - the payments and bitcoin app formerly known as Square) had a nice write up with some additional color around MercadoPago’s partnership with Paxos. What’s interesting here is that the focus of this partnership appears to be just as focused on facilitating crypto payments as it does allowing access to investing in crypto assets. Paxos’ Head of Strategy Walter Hessert told The Block:
“As we start to see stablecoins be integrated into mainstream platforms like Mercado Libre, I think we’re going to start to see new use cases of stablecoins beyond just crypto trading and DeFi, but payments for actual goods and services.”
Portal do Bitcoin also reported that Mercado Pago would not be immediately allowing users to withdraw their crypto from the platform - a heresy to crypto purists who argue “not your keys, not your coins”. This rollout is similar to Robinhood and PayPal in the US, platforms that subsequently announced plans to allow for withdrawals after bad publicity and user complaints.
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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 English-speaking audience.
👩💻Brazil Crypto Hiring Spotlight
Ripio, the Latin American crypto exchange which acquired Brazil’s BitcoinTrade earlier in 2021, is looking to fill 27 new roles. These positions range from technical (product, developer), compliance, operations and business development. (Valor Investe)
🗞Brazil Crypto News Rundown 🗞
2TM, the parent company of Mercado Bitcoin, raised an additional US$50m and announced the ‘second closing’ of its Series B round. Participants in the round included North American firms 10T Holdings (a private equity focused on digital businesses) and Tribe Capital (a San Francisco venture capital firm), and Brazilian firms Traders Club, Pipo Capital and Endeavor.
The round began in July with a US$200 million injection from the Softbank Latin America Fund. Roberto Dagnoni, CEO of 2TM indicated that the firm is preparing to expand into other markets like Mexico, Argentina, Chile and Colombia.
"We closed 2020 with about 2 million customers and, since the beginning of the year, we have advanced to more than 3.2 million, a level very close to that of the Brazilian stock exchange, which only reinforces Brazilians' appetite for digital assets and this tsunami that is reaching the traditional financial market.”
Dagnoni also explained that Mercado Bitcoin added 400,000 new clients and processed R$40bn (US7.4bn) in trading volume between January and October 2021. This figure is equivalent to 2x the total trading volume generated by the exchange from its founding in 2013 to the end of 2020. (CoinTelegraph Brasil) (InfoMoney) (CoinDesk)
Vitreo is launching two new crypto investment funds focused on smart contract platforms. Vitreo Cripto Smart will be available to accredited investors only and feature a 100% allocation in smart contract-native assets. The minimum investment will be R$5,000 (US$879), with an administration fee of 1.5% per year and a 20% performance fee. The second fund, Vitreo Smart Coin, will be available to retail investors and feature a 20% exposure to Vitreo Cripto Smart and 80% exposure to cryptocurrency ETFs listed on the B3 exchange. It requires a minimum investment of R$1,000 (US$176) and has an 0.34% administrative fee, as well as an indirect performance fee determined by the funds in which it is invested. Vitreo partner and CIO Jojo Wachsmann explained:
“The main advantage of the thesis and this structure that we created is to facilitate access to the portfolio's assets, as well as to add to the fund's composition the curatorship of Empiricus and Vitreo assets, providing investors with tokens with high potential for appreciation. At a time when the Ibovespa accumulates five months of consecutive declines, the funds bring prospects of good returns for investors.” (CoinTelegraph Brasil) (Valor Investe)
Blockchain.com, the US$5.2bn crypto wallet and data provider, acquired Argentina-based crypto investment platform SeSocio in a move to further expand its reach in Latin America - including countries like Mexico, Brazil, Chile and Colombia. It is Blockchain.com’s largest acquisition since being founded in 2011. CEO Peter Smith explained in a statement that Latin America is one of the largest growth opportunities of the coming decade, adding:
“Millions of people have seen terrible inflations, new currencies have sprung up out of nowhere and experienced political instability - creating a favorable environment for cryptocurrencies.” (CoinTelegraph Brasil) (Exame)
BitcoinToYou launch a new token called CO2R that offsets the carbon footprint left by companies. The token lives on Binance Smart Chain and is the fruit of a partnership with Celo4 Earth. (CoinTelegraph Brasil)
Mercado Bitcoin has listed a flurry of new cryptocurrencies including SOL, the native token of the Solana blockchain, Filecoin (FIL), Cosmos (ATOM), Convex Finance (CVX), Paxos Dollar (USDP) and Loopring (LRC). The exchange plans to have 100 crypto assets available for trading by the end of 2021. Fabricio Tota, director of new business at Mercado Bitcoin, commented:
“This is a very important month for the Bitcoin Market and its 3.2 million customers. We have a flurry of launches that will help clients to diversify their portfolio and even invest in projects they believe in, such as innovation. In addition, some of these products allow the boldest investor to take a risk with more volatile assets. It even has a cryptocurrency that offers exchange protection.” (CoinTelegraph Brasil) (CoinTelegraph Brasil) (Portal do Bitcoin)
Brazil’s crypto ETFs are the highest-performing among all products launched on the B3 stock exchange in 2021, according to a new report by Economatica, a consultancy. QR Capital’s bitcoin ETF, BQBTC11, was up 108% on the year through November 25, while QETH11, its Ethereum ETF, was up 76%. Next in line were Hashdex’s ETHE11 and BITH11, bitcoin and ethereum ETFs that are both up 59%. (InfoMoney) (Portal do Bitcoin)
$MENGO plummeted 25% to all-time lows after Flamengo was defeated by Palmeiras in the Copa Libertadores final. The pullback showcases the price of tokens like $MENGO, the official ‘fan token’ of the Flamengo football club, can swing wildly and unpredictably based on a team’s performance. (CoinTelegraph Brasil)
Santos became the first Brazilian club to launch a fan token via an offering a decentralized exchange when it launched $SANTOS on PancakeSwap, a DEX on Binance Smart Chain. The “Initial Farm Offering” took place on December 1 with 400,000 tokens issued at a price of US$2.50. Shortly thereafter, the token was trading at US$35 on Binance - an increase of 1,300% - before dropping down to US$5.60 as of press time.
$SANTOS holders are now able to farm $CAKE tokens (PancakeSwap’s native token) by providing liquidity in the SANTOS-BNB pool. They can then stake $CAKE to earn more $SANTOS. (CoinTelegraph Brasil) (InfoMoney) (Livecoins)
Investing app Passfolio has enabled trading on 16 new cryptocurrencies for Brazilian customers. The new assets include Shiba Inu, Axie Infinity and Audius, among others. (CoinTelegraph Brasil)
Brazilian YouTuber Felipe Neto took to his social channels to pump a new cryptocurrency - MBOX, the native token of the Mobox metaverse which had just topped US$15. He also took the opportunity to criticize crypto media sites that had pointed out his previous token recommendations which saw mixed results. (Portal do Bitcoin)
The average cryptocurrency transaction in Brazil is R$450 (US$80), according to a new report by CoinPayments. 77% of such payments were made by customers between the ages of 18 and 35 years, and 82% resided in the South and Southeast regions of the country. Rubens Neistein, business manager at CoinPayments explained:
“The survey shows that the movement of cryptocurrencies in the Brazilian market follows the global scenario. It is common for young people to embrace the novelty at the beginning, as they are more open to innovation and trends, and for operations to take place in regions that are consolidated both from an economic and technological point of view.” (CoinTelegraph Brasil)
Remittance flows into Brazil reached R$15.9bn (US2.8bn) in the January to September 2021 period. The figure is an 18 percent increase year-over-year and marks highest figure since the data series began being being recorded in 1995. Potential drivers of this figure include the sharp devaluation of the real against the dollar, growing unemployment amidst rising inflation domestically and a wave of Brazilians leaving the country since the beginning of the pandemic. Remittances transacted in cryptocurrencies are not accounted for in official statistics. (CoinTelegraph Brasil)
Cryptocurrencies are becoming an increasingly popular asset class among Brazilian investors, according to a new survey by brokerage firm XP Investimentos. 43 percent of investors and advisors indicated they were interested in the asset class, up 3 points from the month prior. The uptick comes as the Ibovespa, Brazil’s primary equities index, plummeted 5% during November and is down 15% since the beginning of the year. (Money Times)
Even will now accept cryptocurrency payments for real estate through a new partnership with Mercado Bitcoin. One of the largest builders and property developers in Brazil, Even will make bitcoin and Ethereum payment options available for all of its projects. (CoinTelegraph Brasil)
Mercado Livre announced on December 2nd that it will begin accepting bitcoin, ethereum and USDP as payment for all types of products on its platform. The decision came shortly after MercadoPago, ML’s payments app, announced that it would allow customers to buy, sell and hold cryptocurrencies with its app. (CoinTelegraph Brasil)
Gol, the major Brazilian airline, is expanding its carbon offset program to include all flights to Bonito, a city in Mato Gross do Sul, through the purchase of the MOSS cryptocurrency MCO2. (CoinTelegraph Brasil)
Foxbit, the crypto exchange founded in 2014, launched a new solution allowing online businesses to accept payments in cryptocurrency. Foxbit Pay, as it’s called, will permit clients to accept bitcoin and 22 other cryptos as payment. It’s the first Brazilian exchange to offer this type of solution. Foxbit also listed three metaverse tokens - Decentraland, The Sandbox and Enjin, along with the USDC stablecoin. (CoinTimes) (Portal do Bitcoin)
Young Brazilians who are pessimistic about the future of their country tend to buy bitcoin, whereas those who are optimistic are more likely to invest in equities, according to a new study by Hashdex and Fundação Getulio Vargas. (Livecoins)
🪙 Digital Real
The Banco Central do Brasil is inviting market participants and stakeholders to help build the Digital Real. A new design competition called LIFT Challenge is aimed at sourcing ideas from banks, payment institutions, fintechs and IT solutions providers to generate a minimum viable product. The Banco Central is looking for ideas from stakeholders focused on:
digital asset settlement (both for assets native to the digital environment and tokenized)
exchange between currencies
settlement of machine-to-machine transactions in an Internet of Things context
66% of Brazilians say that a digital real will be positive both for individuals and the country’s economic development, according to a survey by software platform Capterra. However, 70% of respondents expressed some type of fear about the digital real, including thefts and hacks, loss of privacy and increased state control over citizens’ funds and financial activities. (CoinTelegraph Brasil)
🎮 NFTs and Gaming
Banco Inter, one of the largest digital banks in Brazil, highlighted the massive opportunities available to investors through blockchain-based metaverses and play-to-earn gaming in a new analyst report.
"[O]ne of the main characteristics of this new universe, which makes it unique and different from what is now defined as the digital universe, is its ability, through the use of blockchain technology, to ensure that there are strict, immutable and predictable, as well as the laws of physics.” (CoinTelegraph Brasil)
6% of Brazilians with an internet connection have had some type of experience in the metaverse, according to a survey by Kantar Ibope Media. (CoinTelegraph Brasil)
Genesys Gaming is looking to lower the costs and barriers to entry for Brazilians looking to play play-to-earn games like Axie Infinity and Star Atlas. (Exame)
🏛 Policy, Regulation and Law Enforcement
A senator in a new report has proposed that cryptocurrency mining in the country be regulated by the Brazilian Electricity Regulatory Agency. Irajá Silvestre Filho also urged that all equipment used for storing and mining cryptocurrencies (even hardware wallets) be approved by the agency. (CoinTelegraph Brasil) (Portal do Bitcoin)
Brazilian Federal Police were reportedly in a panic after discovering a “new technology” - aka cold wallets in Operation Kryptos, a raid in August 2021 that resulted in the arrest of Glaidson Acacio dos Santos. (CoinTimes)
A group of federal deputies are urging Arthur Lira, president of the Chamber of Deputies, to bring a bill that would regulate bitcoin exchanges to the floor for a vote. The bill, sponsored by Aureo Ribeiro, passed at the committee level earlier this fall but has yet to receive a vote by the full chamber. (Livecoins)
Civil Police in the state of Santa Catarina arrested several individuals accused of fraudulently selling cryptocurrencies. (Livecoins)
The Supremo Tribunal da Justica, Brazil’s Supreme Court, allowed Luis Carlos Rosa da Silva to be released from prison and await judgment at home. He is accused of forming a criminal organization via his company Arbcrypto, a Belize-headquarted firm that promised investor returns via cryptocurrency arbitration actions. (Portal do Bitcoin)