🇧🇷 Brazil Crypto Report #27: Rio Goes Full Crypto
👋 Olá pessoal, Feliz Ano Novo and seja bem-vindo to 🇧🇷 Brazil Crypto Report for the weeks of January 1-16, 2022.
I hope everyone is having a good start to 2022. It’s gonna be a big year and I’m sure you’re all excited and ready to get to work. Lots going on this week so let’s dive in.
The big news of the week is Rio de Janeiro mayor Eduardo Paes’s big move: he announced that the Cidade Maravilhosa will invest a 1% of its treasury in cryptocurrencies, offer a 10% discount to companies and citizens who pay taxes in bitcoin and issue its own coin called CriptoRio - which will likely be issued via the Stacks “CityCoins” platform. Paes is also launching a series of working groups that will examine how Rio can be transformed into a cryptocurrency hub.
The announcement came during a panel conversation between Paes and Miami Mayor Francis Suarez at Rio Innovation Week, which was chock full of content around crypto, blockchain, NFTs etc, as well as talks by Steve Wozniak and Richard Branson.
The discussion came just days after Paes convened a virtual meeting with Mayor Suarez, who has become the prototype crypto-forward prefect, to discuss innovation and economic matters. Miami was the first city to launch its own “CityCoin” last year. (CoinDesk) (CoinTelegraph Brasil) (Bloomberg Linea) (MoneyTimes)
It goes without saying that this is massive news to kick off the year. It comes as Rio is in the midst of some identity and soul-searching following the Olympics and World Cup and a two year pandemic that have stifled tourism. Most importantly, for our conversation it catapults crypto to the forefront of the mainstream economic agenda across Brazil for 2022.
💣 In other high-level news, U.S. crypto news publication CoinDesk (my former employer) and InfoMoney have launched a news partnership that will provide translated CoinDesk content into Portuguese and publish original crypto reporting out of Brazil in English.
The first article in this partnership explores the growing demand out of Brazil for USD-denominated stablecoins like tether. Locals traded US$11.4bn in stablecoins in 2021 - tripling the prior year volume, per data from the Receita Federal, Brazil’s tax authority. The increase in use comes amid 10% inflation and offers much easier exposure to USD than other methods. Stablecoins also offer the ability to generate yields much higher than found in the local stock market or savings accounts.
Até mais and we’ll see you after the break,
Aaron
Perguntas? Sugestões? Find me at aaron@brazilcrypto.report, @AaronStanley on Telegram or on Linkedin
🙏 Special thanks to NEAR Foundation for supporting Brazil Crypto Report!
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.
💣 Trending Cryptos in Brazil
Each week we highlight in this section the top 10 trending cryptocurrencies in Brazil, using data from CoinGecko from January 16.
🏆 Bomber Coin continues its stranglehold on the #1 slot, followed by the #1 crown for the second consecutive week, followed by CryptoCars, CryptoPlanes and Baby Doge Coin.
🗞Brazil Crypto News Rundown 🗞
📈 Markets
Bitcoin trading in Brazil in 2021 was up 417% from the previous year.
Brazilians traded R$103.5bn (US$18.7bn) worth of bitcoin in the calendar year, up from R$20bn (US$3.61bn) in 2020 and R$11bn (US$2bn) in 2019. (Valor Investe)
The main factors driving this growth, according to CoinTrader Monitor, were a 17% appreciation in the nominal value of BTC transacted, 70% appreciation of BTC against the real and the devaluation of the real against the US dollar during the year.
Chinese exchanges Binance and NovaDax combined for 20% of total search volume for the year. (CoinTelegraph Brasil) (CoinTimes)
Source; Cointrader Monitor 
2TM, the parent company of Mercado Bitcoin, commenced its expansion into Europe with an agreement to take a controlling stake in CriptoLoja, Portugal’s first regulated crypto exchange. (CoinDesk) (Portal do Bitcoin) (Valor Investe) (Bloomberg Linea) (MoneyTimes)
The deal still requires formal approval from Portugal’s central bank, which is expected in the coming months.
Neither the amount of the transaction nor the stake acquired were disclosed.
CriptoLoja founders Pedro Borges and Luis Gomes will remain in control of the company while looking after 2TM’s expansion into Europe.
2TM will initially offer over-the-counter trading in Portugal and later roll out services for retail and institutional clients.
CriptoLoja became the first official virtual asset service provider in Portugal when it received a license from the Central Bank of Portugal.
2TM CEO Roberto Dagnoni said in a statement:
“Portugal is a strategic market for us, because it requires a specific license, is becoming an important hub for crypto in Europe and opens a gateway into the larger European market.”
B3, Brazil’s primary stock exchange, will launch BTC and ETH-linked products in 2022, including futures products for both cryptocurrencies. Jochen Mielke de Lima, a director at the exchange, said that formal announcements will begin to drop in the coming months. One key hurdle to overcome is deciding whether the products should be indexed against USD or BRL, as a cryptoasset index in reais does not yet exist. B3 also intends to offer custody and settlement services to national crypto exchanges. Mielke explained:
“We have around 30 national crypto exchanges, apart from the international ones that operate here. We could offer a service to facilitate and standardize their operations. I believe it has something to explore in providing custody services and in the settlement process.” (CoinTelegraph Brasil) (Valor Investe)
Mercado Bitcoin launched a calculator for Santos token owners that shows how much they can earn with their assets via FIFA Solidarity Mechanism payouts. (Portal do Bitcoin)
2TM launched its Bitrust, a custodial service that offers bitcoin custody services to large investors and holders.
It will first offer bitcoin only but is expected to expand to other currencies in the first quarter.
The custodian has the SOC (System and Organization Controls) certification from an undisclosed Big Four auditor, bringing it in line with international infosec and data privacy standards.
The service fulfills a custody need in the Brazilian market, which has lagged behind larger crypto markets in this regard. Paloma Seville, Bitrust’s head of business development, explained:
“Despite being already consolidated in more developed markets, in Brazil the ones who end up meeting this [custody] demand are still the brokerages, which were not created only with this objective." (CoinTelegraph Brasil) (Portal do Bitcoin) (Bloomberg Linea)
Mercado Bitcoin will list XTZ, the native token of the Tezos blockchain, and Radio Caca - a DAO project promoted by Elon Musk’s mother that seeks to unify various subsets of crypto. (CoinTelegraph Brasil)
Gavea Marketplace, a blockchain-based digital commodity exchange, raised a R$23m investment round from venture capital fund Astella and 2TM, owner of Mercado Bitcoin, among others. The agtech firm will focus on making ESG validations using blockchain and expanding the distribution of Brazilian commodities into Europe and Asia. (CoinTelegraph Brasil)
Tokenization startup Liqi raised a R$27.5m (US$5m) Series A round led by Kinea Ventures - which is Itaú Unibanco's Corporate Venture Capital fund. Oliveira Trust and Honey Island by 4UM fund also participated. Liqi intends to use the funding to double the size of its team in the next six months. Founded in 2021, it has two products: a brokerage that handles primary token issuances and a platform that mints tokens via the Ethereum blockchain. (CoinTelegraph Brasil) (Exame) (InfoMoney)
Brasil Bitcoin, an exchange, announced the listing of five new tokens: Decentraland (MANA), The Sandbox (SAND), Axie Infinity (AXS), Polygon (MATIC) and Chainlink (LINK). (CoinTelegraph Brasil)
Cruzeiro will distribute R$589,000 to token holders via the FIFA Solidarity Mechanism from defender Murilo Cerqueira’s new R$15.5m contract with Palmeiras, where he will play until 2026. (CoinTimes)
Binance made six new cryptocurrencies available for Brazilians to purchase with a credit or debit card, bank transfer or Pix. (Livecoins)
An unknown Peruvian bitcoin exchange has registered with the name 9780Bitcoin to begin operations in Brazil with a Sao Paulo office. (Livecoins)
Chinese exchange Bitget is launching operations in Brazil with a US$150 promotion for new users. The exchange, which is the official sponsor of the Italian football club Juventus, says it will use Brazil as the entry point for a broader expansion into Latin America. Youyou Tian, head of Latin America at Bitget, commented:
“For 2022, our goal is to establish our company in Brazil and help to expand the crypto-assets market even more…Now it is natural for us to expand to Latin and Central America, a continent that has been massively adopting cryptocurrency technology and taking advantage of the full potential of blockchain”. (CoinTelegraph Brasil)
🚀Adoption
Bitso, Latam’s largest crypto exchange, is officially a sponsor of the São Paulo Football Club for the next three years. In addition to having Bitso’s name on the sleeve of the SPFC jersey, the partnership will offer SPFC fans exclusive experiences at Estadio do Morumbi, such as a dedicated fan zone for 18,000 Bitso clients and the ability to make purchases with crypto. SPFC has Brazil’s third largest fan-base with an estimated 20 million fans. Beatriz Oliveira, Bitso’s head of marketing for Latin America, said in a statement:
“We are very proud to announce this alliance to sponsor the club with the most international titles in Brazil, a club with which Bitso has a common objective: to always be in constant pursuit of excellence, something we will do together from that moment on.” (CoinTelegraph Brasil) (Portal do Bitcoin) (Exame) (Valor Investe) (MoneyTimes)
More than 30% of small business merchants in Brazil plan to offer customers the option to pay using cryptocurrencies in 2022, according to a global payments survey of 2,500 merchants by Visa. (Exame)
Arthur Mining, a U.S.-based bitcoin mining operation founded by Brazilian partners, grew over 250% in 2021 and projects an operating income of US$130m for 2022. The company has leveraged so-called “green mining” techniques that minimize the environmental impact of crypto mining, such as using methane and other gases captured during crude oil processing. CEO Ray Nasser indicated that a public offering in the U.S. is likely in the next couple of years. He told Forbes:
"A business with great capacity for cash generation and high margins, aligned with the best ESG practices and generating a positive socio-environmental impact, has everything to be a different 'unicorn'. And our bet is that there is room to list it on the stock exchange.”
ABCripto, a trade association representing Brazilian cryptocurrency businesses, added three new member companies: OWS Brasil, Easy Crypto and Uniera. (CoinTelegraph Brasil)
The construction of a photovoltaic solar energy plant financed by the cryptocurrency project EnyCoin is underway in Minas Gerais. The plant, located in Itaobim, is expected to generate 1MW of energy upon completion this coming December. Total budget for the project is R$5.5m (US$1m) and will be fully financed by Enycoin. (CoinTelegraph Brasil)
Convex Research, a research house specializing in volatile markets, announced the hiring of information security analyst and computer scientist Edilson Osório as CTO, signaling a broader shift into the crypto and blockchain investment landscape. (CoinTelegraph Brasil)
Brazilian private equity mogul Fersen Lambranho penned a column for Folha de S. Paulo defending the use of blockchain technology and arguing that it can be the “salvation” of Brazilian democracy. Lambranho is chairman of the board for GP Investimentos and G2D Investments - both are large private equity and alternative asset investment funds. (CoinTelegraph Brasil)
Brazilian fintech and tokenization startup Moeda has added Jorge Noguera, president of Mastercard’s Mexico and Central America division, to its board of directors. Moeda, a platform that makes finance more accessible to indigenous groups and unbanked communities, was recently selected for the Mastercard Start Path program. (CoinTelegraph Brasil)
Corporate travel startup Loupit is now accepting payments in more than one hundred cryptocurrencies through a new partnership with CoinPayments. (CoinTelegraph Brasil).
Coinpayments also announced a partnership with Transfero to integrate the BRZ stablecoin, allowing users to store, send and receive transactions with the asset. (CoinTelegraph Brasil)
Auction marketplace Bom Valor says that it has handled more than R$480m (US$86.7m) in auctions using blockchain technology. (CoinTelegraph Brasil)
Nubank advisor and board member Anita Sands has joined the board of directors of Circle, issuer of the USDC stablecoin. (CoinTelegraph Brasil) (Portal do Bitcoin)
🎮 NFTs, Gaming and Metaverse
Vasco da Gama, the Rio de Janeiro-based football club, is launching its own line of NFT virtual tickets through a partnership with Block4. (Forbes) (Livecoins)
18 characters from Brazilian folklore will be minted by artist Monteiro Lobato into a collection of NFTs called Crypto Legends. The characters include the Cuca, a sorceress with an alligator’s head, and Saci - a mischievous man with a red cap, pipe and one leg. (CoinTelegraph Brasil)
🏛 Public Policy and Enforcement
The Brazilian Senate is expected to vote on cryptocurrency legislation in the coming months. These texts differ, however, from the bill passed by the Chamber of Deputies in December. (Portal do Bitcoin) (CoinTelegraph Brasil)
A 2018 complaint accusing of major banks like Itaú and Bradesco of arbitrarily closing the bank accounts of companies working with bitcoin and cryptocurrencies lives on. The Council for Economic Defense postponed a decision on the proceeding in early January. The banks are expected to lose the case due to the fact that most of them now offer bitcoin-related investment products to their clients. (CoinTelegraph Brasil)
Representatives from Brazil’s Federal Police will travel to El Salvador in late January to participate in a course on cryptocurrency investigations and criminal use. (CoinTelegraph Brasil)
The Lamborghini that once belonged to “Bitcoin King” Cláudio Oliveira before being seized by Federal Police was on display in a shopping mall in Londrina, in the state of Parana. (Livecoins)
A Brazilian bitcoin user has sued PayPal after having his account blocked. (Livecoins)
Police in Minas Gerais are investigating a cryptocurrency consultant accused of stealing R$4m (US$720k) worth of crypto assets from multiple individuals including his brother, ex-fiance and ex-to-be father-in-law. Jonathan Machado Lucas Nogueria, known as the “Prince of Bitcoin”, was reported to authorities after disappearing nine days before his planned wedding in September 2021. He has been traveling around Europe with stops in Lisbon, Turkey and Paris while continuing to operate his cryptocurrency consultancy business, according to his social media accounts. (CoinTelegraph Brasil) (Portal do Bitcoin)
Federal Deputy Kim Kataguiri published a YouTube video criticizing the Aureo Ribeiro bill to regulate cryptocurrencies, which was approved by the Chamber of Deputies in December, saying it grants broad and unrestrictive powers to the Executive Branch. He warned that the political class’s ideas about crypto assets have “nothing good, nothing that will bring benefits to the crypto market.” The video has been viewed 37k times. (CoinTelegraph Brasil) (Portal do Bitcoin)
Portal do Bitcoin and Livecoins tell the tale of Johann Steynberg, a South African crypto pyramid scheme operator who was arrested while hiding from authorities in Goiás. He operated Mirror Trading International, which at US$290m was the largest pyramid scheme involving cryptocurrencies worldwide in 2020, according to Chainalysis. (Portal do Bitcoin)
A Brazilian court denied a customer request to freeze accounts at Binance and Huobi. The customer claimed that 19 bitcoins were transferred without permission from his blockchain.com wallet to accounts on both exchanges that he is now unable to access. (Portal do Bitcoin) (Livecoins)
Police in Sao Paulo are investigating the murder of an alleged drug trafficker who allegedly won R$25m playing the lottery and then bought R$300,000 in BTC. Anselmo Becheli Santa Fausta was shot while riding in his car in Sao Paulo on December 27. (CoinTimes)
NovaDax was sued by a customer who allegedly lost R$70,000 on a PundiX swap in April 2021 due to a technical issue on the platform. (Livecoins)